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Yellen Losing Dollar Bet as Its Rise Slows Growth, Inflation

  • Fed to delay next rate move in response, JPMorgan says
  • Strong dollar has big economic impact in Fed computer model
Federal Reserve Chair Janet Yellen.

Federal Reserve Chair Janet Yellen.

Photographer: Andrew Harrer/Bloomberg
Updated on

Federal Reserve Chair Janet Yellen and her colleagues have so far found themselves wrong-footed by the stronger dollar after they raised interest rates last month for the first time since 2006.

In spite of suggestions by some officials that the U.S. currency’s rise would soon run out of steam, the dollar has appreciated by some 2 percent since the central bank last met on Dec. 16, measured on an effective exchange rate-basis. Coming on top of a 11 percent increase in the year prior, the latest advance will curb already slowing economic growth and put downward pressure on an inflation rate that the Fed judges is too low as it is.