WASHINGTON (dpa-AFX) - The U.S. dollar firmed on Wednesday after the Federal Reserve announced its decision to accelerate the pace of reductions to its asset purchases program and signaled interest rate hikes, but subsequently gave up gains and shed ground against most of its peers.
The central bank, citing rising inflation and further improvement in the labor market, said it has decided to reduce the monthly pace of its net asset purchases by $30 billion per month, double the previously announced $15 billion per month.
The Fed said it expects to end its asset-buying program next March and also announced its widely expected decision to keep the target range for the federal funds rate at zero to 0.25%.
The central bank's latest projections forecast as many three rate hikes in 2022 compared to the lone rate hike forecast in September.
Fed officials also forecast that inflation would run at 2.6% next year, compared to the 2.2% projected as of September.
The European Central Bank, the Bank of England and the Bank of Japan are scheduled to make their monetary policy announcements this week.
The dollar index, which climbed to 96.91 soon after the central bank released its monetary policy, retreated subsequently and is at 96.33, down more than 0.25% from the previous close.
Against the Euro, the dollar firmed to $1.1224 after Fed announced its policy, but weakened to $1.1295 subsequently.
The Pound Sterling strengthened, fetching $1.3262 a unit, recovering after having dropped to $1.3173.
The dollar is trading at 114.06 yen, gaining from 113.76 yen. However, it is down from the day's high of 114.26.
Against the Aussie, the dollar is at 0.7174, giving up gains after firming to 0.7093 earlier.
The dollar is fetching CHF0.9250 a unit, and trading at C$1.2837, after having climbed to C$1.2916 earlier.
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