The US dollar is plummeting in the middle of the trading week after the Federal Reserve completed its June Federal Open Market Committee (FOMC) policy meeting. Investors were optimistic about the broader market as the US central bank reaffirmed its commitment to keeping interest rates at near zero until 20220 and maintaining its aggressive quantitative easing program. Is the dollar rally over?

On Wednesday, the FOMC voted to keep rates in a target range of 0% and 0.25%, and it anticipates that there will be no rate hikes for two years to support economic growth. The dot-plot suggests that a zero-interest-rate-policy will be here for longer than two years.

Fed officials think the inflation rate will stay below 2% until 2023, and Chair Jerome Powell dismissed taking additional action to boost inflation because it is already firing on all cylinders.

The Fed slashed its estimate for the gross domestic product (GDP) to -6.5%, but the central bank forecasts that the US economy will rebound 5% in 2021. On the labor front, it raised its median estimate for 2020 unemployment to 9.3%, but it projects the jobless rate will come down to 5.5% in 2022.

Overall, the Fed plans to keep credit flowing and will purchase Treasurys and agency bonds until the economy is on the road to recovery. Powell did, however, employ Congress to implement greater fiscal relief and stimulus to ensure the US can sustain the post-coronavirus recovery.

The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world. The virus and the measures taken to protect public health have induced sharp declines in economic activity and a surge in job losses. Weaker demand and significantly lower oil prices are holding down consumer price inflation. Financial conditions have improved, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

To support the flow of credit to households and businesses, over coming months the Federal Reserve will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions. In addition, the Open Market Desk will continue to offer large-scale overnight and term repurchase agreement operations. The Committee will closely monitor developments and is prepared to adjust its plans as appropriate.

During the virtual press conference, Powell dismissed comparisons between today’s recession and the Great Depression, noting that the economy was in good shape and the financial system was well capitalized before the public health crisis. The long-term trajectory of the US economy, Powell stated, remains solid and the Fed’s projections have not changed.

The US Dollar Index, which measures the greenback against its main currency rivals, fell 0.5% to 95.84, from an opening of 96.43. The index is officially in negative territory on the year, declining 0.6%. The dollar had surged as much as 4% at the height of the financial crisis as investors poured into the buck.

The USD/CAD currency pair tumbled 0.43% to 1.3357, from an opening of 1.3418, at 19:02 GMT on Wednesday. The EUR/USD jumped 0.43% to 1.1388, from an opening of 1.1341.