Dollar hits highest level since 2020 as traders brace for Fed rate rises
Jay Powell heightens market expectations for ‘aggressive’ action to tamp down on inflation
The US dollar surged to its highest level in nearly 18 months on Thursday as currency traders reacted to Federal Reserve chair Jay Powell’s refusal to rule out an aggressive series of interest rate rises this year.
Powell said on Wednesday the US central bank would be “humble and nimble” in deciding how quickly to tighten monetary policy in the face of soaring inflation, a phrase interpreted by investors as leaving the door open to a faster pace of rate increases than previously anticipated. The dollar rose 0.6 per cent against a basket of rival currencies, eclipsing a recent high in November and reaching a level not seen since July 2020.