Dollar steady as Fed's Powell says higher rates may be needed
dollar held steady on Friday, on pace to finish the week strong, after Federal Reserve Chair Jerome Powell said the central bank may need to raise interest rates further to ensure inflation is contained, but promised to move «carefully» at upcoming meetings. Powell, in a speech at an economic summit in Jackson Hole, Wyoming, said policymakers would «proceed carefully as we decide whether to tighten further,» but also made clear that the central bank has not yet concluded that its benchmark interest rate is high enough to be sure that inflation returns to the 2% target.
The U.S.
dollar index — which measures the currency against six major counterparts — was about flat at $104.06 after rising to 104.44, its highest since June 1.
The index, up 0.6% for the week, was on course for its sixth straight week of gains, aided by signs of resilience in the U.S. economy that has bolstered the case for rates staying higher for longer.
«On balance, this is a modestly less hawkish speech than markets had feared,» said Karl Schamotta, chief market strategist at Corpay in Toronto.
«Powell's words lacked the drama associated with previous speeches from (Former Fed Chair Ben) Bernanke and (former European Central Bank President Mario) Draghi, and even fell short of the directness found in his own appearances, but we would argue this is a good thing — conditions remain too uncertain for black-and-white messaging, and markets should welcome a more gradualist and incremental approach at this point in the tightening cycle,» Schamotta said.
Interest rate futures tied to the Fed's policy rate on Friday priced in a more than even chance of tightening at either the November or December policy meetings.
«We remain comfortable with our call for one
