DXY: Powell's comments pushed dollar higher
The dollar received support after yesterday's statements (during the event of the International Monetary Fund) by Fed Chairman Jerome Powell, who signaled the possibility of raising interest rates by half a percentage point in the meeting, which will be held May 3-4. The DXY dollar index is rising at the beginning of today's European session, again exceeding the psychologically important mark of 101.00.
Powell made it clear that such increases may be required in the future to reduce inflation. "I think it's appropriate to move a little more quickly", Powell said.
"The market is overheated", he said. "Our job is to get it into a more constructive mix of supply and demand", and the Fed is primarily focused on lowering inflation. "The economy doesn't work without price stability," said Powell.
The Fed is trying to cope with the difficult task of providing a "soft landing" for the economy, while also helping to reduce inflation. "In my opinion, hardly anyone at the Fed can say that this is easy. It will be very difficult to do", - said Powell.
Investors now expect the Fed to raise rates by 50 basis points in each of the next two meetings, and the growing divergence in the Fed's and other major global central banks' conditional monetary policy curves will further strengthen the dollar and lift the DXY index, economists say.