(Finance) – The dollar returns close to parity against the eurotrading at a month high, after several US Central Bank policymakers talked about further aggressive increases in interest rates, as the Fed is still committed to fighting inflation. “Recent comments from the FED have provided a more balanced picture after the dovish reading of the markets on the latest minutes of the FOMC, “analysts noted ING, according to which the most important question will not be whether it will move to a slower pace, but whether this will change the endpoint. “This is less clear and unlikely to be answered soon,” they point out.
The markets had initially responded positively to the publication of the minutes of the last meeting of the US Central Bank, which showed that there could be high rates over a long period to fight inflation. However, although the Fed has highlighted the “little evidence” that inflationary pressures are easing, it did reveal the possibility of a slowdown in the pace of increases.
This narrative has changed in the past few hours as several Fed officials spoke of the need for more aggressive rate hikes. The President of the Federal Reserve Bank of San Francisco, Mary Dalyalso explicitly thwarted the idea that the first rate cuts could take place soon after that the Fed pushed rates into restrictive territory to meet its inflation targets.
More aggressive tones also came from the president of the FED in Minneapolis, Neel Kashkariwhich still sees several ways to go on rates, even if that makes a recession more likely. James Bullard was more outspoken in leaning towards another larger increase in 75 basis points in September. Bullard also held back on the slowdown in inflation: “The road to bringing inflation under control is long, that inflation has peaked is a hope not yet supported by the data”.
The exchange rate EUR / USD stands at 1.0050 at 13.35 Italian time. However, the strengthening of the dollar is not only against the euro. L’US dollar index, an index of the value of the US dollar in relation to a basket of foreign currencies, is trading at its highest in over a month. The dollar index moves up by 0.49% to 108.01.