According to BBH economists, rising inflation expectations of US consumers may further dampen money market expectations of Fed funds rate cuts this year and turbocharge the rise of the USD.
Will the USD rise turbocharge?
We see room for Fed funds rate expectations to adjust upwards in favor of a firmer dollar because underlying price pressures in the US remain elevated and economic growth prospects are encouraging. .
The risk to our bullish view of the USD is that the Fed dismisses the latest high inflation readings as noise and moves forward with a dovish stance. This would lead to a decline in real interest rates in the US and weaken the USD against most major currencies.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
