Macro Minutes: Inflation and USD Movement

Key Points

• Recent central bank intervention has kept interest rates low, while inflation expectations have normalised.
• Fears of a rapidly rising inflation tied to recent increase in money supply appear overblown given the velocity of money likely remains weak.
• Year to date USD movement appears to be primarily sentiment driven – appreciating in the downturn as investors sought safe havens and depreciating in the recovery as sentiment improves.