The dollar index consolidated above 100.6, not far from an over two-year high of 101 touched in the prior session, as investors increasingly bet the Fed will need to raise rates faster to rein in soaring inflation. Fed Chair Jerome Powell made clear when speaking as part of an International Monetary Fund panel that the central bank remains committed to taming inflation, currently at 40-year highs, while opening the door for a 50bps interest rate hike in May.
Several Fed policymakers, including regional presidents Mary Daly of San Francisco, Charles Evans of Chicago and Raphael Bostic of Atlanta, echoed such a narrative this week. The Fed’s stance contrasts with other banks worldwide, which either take a more dovish stance like the ECB or the BoJ or take an expansionary approach like the PBoC.