Currecny Update

Dollar remains pressured against most currencies after FOMC minutes. While further rate cut is generally expected by the end of this year, opinions are still divided on whether that will be delivered in the Oct or Dec meeting. Unsurprisingly, recent market turmoil and credit tightening were the main focus of the meeting the members judged loosening monetary policy was an appropriate response to the tightening in credit. Even though, there is no specific plan for further rate cuts and "further actions would depend on how economic prospects were affected by evolving market developments and by other factors", members are generally concerned that "outlook for economic activity as characterized by particularly high uncertainty, with the risk to growth skewed to the downside." On inflation, the members "recognized that incoming data on core inflation continued to be favorable, and they generally were a little more confident that the decline in inflation earlier this year would be sustained." Though, "inflation risks could be heightened if the dollar were to continue to depreciate significantly."