Dollar Strengthens after Hot Inflation
The dollar index strengthened to approach 108.5 on Wednesday, the strongest in more than a week, after the US CPI report showed rising inflationary pressures and stalled progress in curbing inflation.
All measures came above forecasts with the headline inflation unexpectedly rising to 3% and the core one increasing to 3.3%. At the monthly level, the CPI also rose 0.5%, the most since August 2023.
Figures reinforced the Fed's cautious approach on further rate cuts. Yesterday, Chair Powell reaffirmed before Congress that the Fed is in no rush to cut interest rates. He reiterated the pledge from the last FOMC meeting in January, when the central bank paused its rate-cut cycle.
Traders are now only pricing in a 25 bps cut in the fed funds rate for December. Meanwhile, President Trump repeated his pledge to lower borrowing costs and posted on Truth Social that “Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!! Lets Rock and Roll, America!!!”.
Source: Trading Economics
