Afternoon Must-Read: Tim Duy: Will the Dollar Impact US Growth?

But long US rates continue to hover around 2%…. The stronger dollar does negatively impact growth, but market participants expect a monetary offset. Hence… the ball is in the Federal Reserve’s court… assuming the Federal Reserve takes sufficient note of the rising dollar, and its impact on inflation…. Paul Krugman is lamenting the possibility that some FOMC members interpret falling interest rates as reason to tighten policy more aggressively–a view primarily outlined by New York Federal Reserve President William Dudley…. Dudley’s stance clearly opens the door to the possibility of the Fed running an excessively tight policy stance, which wouldn’t happen if they took their inflation target seriously.