The Dollar fell to a one-month low versus the Euro on Wednesday after the Federal Reserve cut its 2008 growth forecast and warned of higher unemployment, reducing prospects of an interest rate hike later this year.
Although minutes of the Fed's April 29-30 policy meeting highlighted worries over inflation and signaled more interest rate cuts were unlikely, it was insufficient to halt the Dollar's slide and it also touched a one-week low versus the Yen.
The slide in the Dollar came as stocks tumbled on the combination of record oil prices and the Fed lowering its 2008 growth projections to a meager 0.3% to 1.2% from its estimate of 1.3% to 2% made three months ago. The central bank also warned it expected unemployment to rise "significantly." Some analysts said the minutes of the Federal Reserve's policy-setting Federal Open Market Committee suggested the US central bank could still lower rates further this year.
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