Fed resists interest rate hike

THE dollar fell against the euro and yen yesterday after the US Federal Reserve held the overnight lending rate between banks at 5.25% for a fourth straight meeting and said the economy has slowed.

The US currency dropped to within a cent of a 20-month low against the euro as the Fed’s statement left intact speculation the central bank will cut borrowing costs next quarter. The dollar has lost 10% this year against the euro as investors bet the European Central Bank will boost rates more than the Fed.

The dollar weakened to $1.3279 per euro yesterday after falling to a 20-month low of $1.3367 per euro last week. The dollar dropped to 116.90 yen yesterday.