Dollar Retreats Amid Evidence Of Mild Inflation
Dow Jones Newswires</br></br>NEW YORK -- The dollar suffered a broad-based setback after signs that inflationary pressures remain modest curtailed hopes that the Federal Reserve would move aggressively to raise interest rates.</br></br>The dollar's selloff was sparked by the release of a May consumer- price index that came mostly in line with expectations. While the overall CPI registered the biggest monthly jump in 31/2 years, rising 0.6%, the more closely watched core index, which excludes volatile food and energy costs, edged up 0.2%. Expectations were for a 0.5% gain in the headline number, with a 0.2% rise in core prices.</br></br>Federal Reserve Chairman Alan Greenspan threw even more cold water on speculation that U.S. rates were headed sharply higher when he played down the risk of inflation. The Fed chief, testifying in front of the Senate Banking Committee on his nomination to a fifth term as chairman, said the central bank's "general view is that inflationary pressures are not likely to be a serious concern in the period ahead."</br></br>Thus, Mr. Greenspan said, he still expects to be able to lift interest rates at a "measured" pace this year, though he reaffirmed that the Fed is prepared to raise rates more aggressively if necessary.