25 May 2005, 10:54  Dollar eases after mixed stance on rates

The dollar eased against the yen on Wednesday as the U.S. currency's month-long rally ran out of steam after the Federal Reserve sent a mixed message about the economy's outlook. The minutes of the Fed's May 3 meeting reinforced expectations for more steady interest rate increases but showed some officials were worried about a slowdown in growth, while others zeroed in on an "upcreep" in price pressures. In the end, the minutes provided no fresh clues," said Kaoru Kondo, chief forex analyst at Fisco. All in all, Fed policy makers said growth would likely bounce back and that inflation would remain contained. Since the Fed's meeting, U.S. data have showed solid consumer spending and the pace of core consumer prices cooling. "Fed officials debated the negative effect of external factors on U.S. growth, particularly the increase in oil prices, and that is reflected in the dollar's rise being capped," said Hideki Hayashi, global strategist at Shinko Securities.

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