
Inflation above 3% supports ING’s Chris Turner’s outlook for the US Dollar (USD). Alongside robust US growth and a hawkish Federal Reserve, he expects it to underpin the currency into early 2027. As headline inflation eases towards the Fed’s 2% target, he expects short-dated US rates to fall.
"The dollar should stay supported by strong US growth, high inflation and a Fed threatening to tighten before weakening next spring as inflation falls."

"Our base call assumes that the Federal Reserve stays hawkish in the first quarter, as decent US growth and above-3% inflation keep money markets pricing in the threat of an extended tightening cycle."
"That turns in the second quarter, when energy-driven base effects drop out of headline inflation and a return to the Fed’s 2% inflation target sees short-dated US rates move meaningfully lower."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)