January CPI index rose at 0.4% from December or at 4.3% from a year ago sparking fears of inflation. In the afternoon the Fed statement reiterated that downside risk to the economy remains high but the higher than normal level of inflation may cause a policy reversal. The Fed lowered its outlook for economic growth between 1.2% to 2.0% from its October outlook between 1.8% to 2.5%. Expectations of inflation were revised upwards between 2.1% to 2.4%.
Dollar edged lower but traded near record lows against euro to $1.4709 and edged higher against yen to 108.19.
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