Forex News – Dollar falls after Fed announcement to keep rates low until 2014

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The dollar weakened after the Federal Reserve said it would continue to keep interest rates at exceptionally low levels until late 2014. The Fed made no policy changes, leaving the key interest rate where it has been for three years, at historic lows of 0.25 percent.

The Fed said it does see the U.S. economy “expanding moderately” and calls inflation “subdued.” It added that  the labour market has improved, the unemployment rate remains elevated.

“To support a stronger economic recovery and help ensure that inflation, over time, is at levels consistent with the dual mandate, the Federal Open Market Committee (FOMC) expects to maintain a highly accommodative stance for monetary policy,” the FOMC statement said.

The dollar index which measures the U.S. currency against a basket of six major units, turned down to 79.843, from 80.131

The euro rose against the dollar to 1.3040 within twenty minutes of the statement versus 1.2983 before the announcement.