(fxcue news) - The U.S. dollar fell to a 14-month low on Wednesday, losing ground against its major counterparts after the Federal Reserve cut interest rates for the first time in over four years, aggressively slashing rates by 50 basis points. However, the currency rebounded swiftly, paring most of its losses, as the day progressed. Gaining greater confidence inflation is moving sustainably toward its 2% target, the central bank lowered the target range for the federal funds rate by 50 basis points to 4.75 to 5%. The Fed was widely expected to cut rates for the first time since March 2020, but there was some debate over whether it would lower rates by 25 or 50 basis points. The economic projections provided by Fed officials at the meeting suggested the central bank will cut rates by another 50 basis points by the end of the year. Fed officials also expect to continue lowering rates next year, with the projections indicating rates will by lower another full percentage point by the end of 2025. In economic news today, a report released by the Commerce Department said housing starts spiked by 9.6% to an annual rate of 1.356 million in August after plunging by 3.9% to a revised rate of 1.237 million in July. Economists had expected housing starts to surge by 5.8% to an annual rate of 1.310 million from the 1.238 million originally reported for the previous month. The Commerce Department said building permits also shot up by 4.9% to an annual rate of 1.475 million in August after tumbling by 3.3% to a revised rate of 1.406 million in July. Building permits, an indicator of future housing demand, were expected to jump by 1% to an annual rate of 1.410 million from the 1.396 million originally reported for the previous month. The dollar index, which dropped to 100.22, recovered to 101.15, before easing slightly to 100.95, still managing to post a small gain. Against the Euro, the dollar weakened to 1.1192 after the Fed rate announcement, but recovered to 1.1120, gaining marginally over the previous close. The dollar eased to 1.3299 a unit of Pound Sterling before recovering to 1.3211, but still remained nearly 0.4% down from Tuesday's close. Against the Japanese currency, the dollar gained marginally at 142.30 yen after having dropped to 140.45 after the U.S. central bank's rate cut decision. The dollar weakened to 0.6820 against the Aussie before recovering to 0.6760, down just slightly from a day earlier. Against Swiss franc, the dollar eased to CHF 0.8464, and against the Loonie, it firmed to C$1.3614 after having dropped to C$1.3542 a unit.