Dollar rises as Fed expresses doubt on stimulus

Published on NewsOK Modified: February 20, 2013 at 3:43 pm •  Published: February 20, 2013
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NEW YORK (AP) — The dollar rose Wednesday after a report from the Federal Reserve hinted that the central bank may be closer to slowing or ending its efforts to support the economy.

The Fed released minutes from its January meeting disclosing that several policymakers said they were concerned about the risks of the Fed's policy of buying bonds to keep interest rates low. The bond-buying could eventually cause inflation or unsettle financial markets, they said.

If the Fed ended its program, it would likely lead to higher U.S. interest rates and a stronger dollar.

Foreign exchange analyst Kathy Lien of BK Asset Management said the minutes suggest Fed policymakers could end the bond purchases "way before" the unemployment rate falls below the Fed's current target of 6.5 percent.

"While we are not surprised that Fed officials talked about phasing out asset purchases again...we were surprised by how willing they are to look beyond the 7.9 percent unemployment rate," Lien wrote in a client note.