As Wall Street adjusts to the reality of delayed interest rate cuts, the US Dollar Index has surged by 2.8% so far this year. The greenback had a tumultuous 2023, with investors eagerly anticipating rate cuts that never materialized. Despite an initial decline in November, the US currency rebounded and closed the year stronger against a basket of currencies, including the British pound, euro, Swiss franc, Japanese yen, Canadian dollar and Swedish krona.
However, Fed Chair Jerome Powell’s statement in January that interest rate cuts scheduled for March were unlikely to happen dashed investor hopes. Recent economic data has shown that the US economy is performing strongly, with job growth and inflation numbers indicating that the Federal Reserve will keep rates higher for longer. For instance, in January, the economy gained a remarkable 353,000 jobs and in December; the Consumer Price Index exhibited an annual increase of 3.4%, exceeding the central bank’s 2% target.
While a stronger dollar may not be good news for American companies when it comes to exports, it means that US businesses and consumers could spend less on imported goods and have greater purchasing power when traveling abroad. As for Nebraska’s latest economic performance-stay tuned for more updates!