The Fed did as predicted yesterday and stood pat on interest rates, claiming they are worried about inflation? This is an utter joke since they and they alone are the ones that create inflation. They have this power, because they control the money supply, which in turn controls the direction of overall price levels. It is that simple.
The currency markets are not buying the Fed’s line as the Dollar Index sold off more than a half percent yesterday after the decision and is down nearly that much again already this morning as of this writing. The currency markets knew what was going to happen yesterday for some time, hence the sideways action in the Dollar. The next few weeks will be important to see where we go next. The cards are lined up for a lower Dollar and the Fed/Treasury would love that, but they can’t come right out and say it. So expect the verbal campaign to continue, but little in the way of action.