Dollar Could Rise if Fed's Warsh Sounds Credible

Dow Jones
Yesterday

1312 GMT - The dollar should benefit if Federal Reserve Chair Kevin Warsh sounds credible in his Jackson Hole symposium speech Friday, Bank of America analysts say in a note. Warsh has avoided forward guidance but he might take a different approach at Jackson Hole by outlining the Fed's response under two different scenarios--one of disinflation and the other of persistently stubborn elevated inflation, they say. In short, Warsh should signal he is prepared to raise rates if inflation doesn't continue to moderate, helping the dollar to further unwind losses after the Treasury's decision to buy back more long-term debt. A more muddled message that leans on possible disinflationary benefits of AI or avoids the topic altogether could weaken the dollar, they say. The DXY dollar index falls 0.1% to 98.913.

 

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