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US dollar little-changed after Fed statement

US economic growth braked sharply in the fourth quarter as businesses stepped up efforts to reduce an inventory glut and a strong dollar and tepid global demand weighed on exports.

[NEW YORK] The dollar inched down against the euro and up on the yen Wednesday after the Federal Reserve suggested a March interest rate hike remained viable amid market and economic growth worries.

The Federal Reserve policymakers capped a two-day meeting by leaving the benchmark federal funds rate unchanged, as expected, after an historic December rate hike.

The policy-setting Federal Open Market Committee's brief statement acknowledged the US economy had slowed in late 2015 and weak inflation remained a concern, but predicted it would rise toward the 2.0 per cent target in the medium term.

The FOMC said it was "closely monitoring global economic and financial developments" to assess their impact on the US economy.

"The fresh worry over global risks, such as China's slowing economy and tumbling oil prices, gave the Fed's statement a dovish tilt," said Joe Manimbo of Western Union Business Solutions.

"With the Fed having grown a bit more cautious on global developments, it depicts a higher bar to a US rate hike in the months ahead," he said.' The statement also signaled "gradual" further rate increases, underlining the Fed is the only major central bank on a monetary tightening path.

Kathy Lien of BK Asset Management said that fed fund futures indicate traders do not see the central bank raising interest rates until the second half of 2016.

The euro briefly pushed as high as US$1.0917 after the FOMC statement before falling back to just above Tuesday's level.

The dollar rose to 118.67 yen, and the euro also gained against the Japanese currency, at 129.25 yen. The Bank of Japan wraps up its first policy meeting of the year amid speculation it will unveil new stimulus.