- September 7, 2022
- Posted by: Stratford Team
- Category: Economy
Developed economies are taking a hit from the dollar’s appreciation to multi-decade highs in ways that were once more familiar to their emerging market peers.
Fueled by the Federal Reserve’s most aggressive tightening cycle in more than a generation, the stronger greenback is pushing rival currencies lower, driving up the cost of imported goods, constricting financial conditions and feeding inflation in other economies.
That’s ratcheting up pressure on other central banks to raise interest rates just as an energy crisis and spiraling consumer prices hobble Europe’s economies, and increases in borrowing costs cool housing markets in Australia, Canada and New Zealand. Yet their ability to influence the dollar’s strength is limited, meaning there’s little prospect for near-term relief.
While global ripples from Fed tightening aren’t new, this is the first episode in recent years where serious dollar strength has been more notable…