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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.
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