(New York) The dollar went on the attack again on Friday, supported by a new offensive outing from a member of the American central bank (Fed), in favor of a rise in the key rate beyond 5%, in tune with the words distilled in recent days by several of his colleagues.
Around 4:45 p.m. (Eastern time), the greenback gained 0.53% against the single currency, to 1.0677 dollars for one euro. It went earlier to 1.6666 dollars, the highest in a month.
During an interview with Wharton Business Radio, the president of the antenna of the Fed in Philadelphia, Patrick Harker, considered it necessary to see the Federal Reserve raise its key rate “beyond 5%, before making a break “.
“How far beyond 5%? We’ll see,” he added.
Mr. Harker has thus taken over from several other members of the Fed who, since the beginning of the week, have multiplied calls for continued monetary tightening to curb inflation, while the job market remains very vigorous.
Chairman Jerome Powell on Tuesday, followed by Governor Christopher Waller and New York Branch Chairman John Williams, all warned that rates could go higher than expected and stay high for longer than anticipated.
Operators now assess the probability that the rate will go beyond 5.25% to more than 40%, whereas they only gave a 10% chance to this scenario a month ago.
“If the rate goes beyond 5%, up to 5.50%, or even 6%, even if, in absolute terms, it is not much more (than projected so far), it is huge,” commented Ivan Asensio of Silicon Valley Bank.
Added to this change of gear by the Fed is “a return to risk aversion”, born of uncertainty as to the effect of monetary policies on the economy, according to Joe Manimbo of Convera.
“The Fed’s position may be a cure for inflation […]but it is also a recipe for recession if monetary policy goes too far,” he warns.
Beyond the dollar, the currencies of countries whose central banks “raise their rates because they started late or continue to raise them will be sought after” and appreciate, according to Ivan Asensio.
Mexico and Sweden, whose central banks both surprised by raising their rates by half a point each, soared this week.