The dollar index broke the 101 mark for the first time since March 2020 on Tuesday, underpinned by soaring US Treasury yields, as investors braced for multiple half-point rate hikes from the Federal Reserve as it seeks to rein in soaring inflation. St. Louis Fed President James Bullard, a noted hawk, said Monday US inflation is “far too high” as he repeated his case for increasing interest rates to 3.5% by the end of the year.
The Fed raised its target policy rate by 25 basis points last month, and its forecasts released at the time showed policymakers expected rates to rise to 1.9% by year-end.
Bullard’s preferred rate path would require half-point rate hikes at all six of the Fed’s remaining meetings this year. The dollar also gained on expectations of good economic data, with analysts pointing to the US economy’s outperformance relative to other major economies amid global headwinds.
