Recent Appreciation in the U.S. Dollar Unlikely to Have Large Effect on Domestic Inflation

Johannes Matschke and Sai Sattiraju

Economic Bulletin, 2022, issue August 17, 2022, 4

Abstract: The U.S. dollar has appreciated more than 8.5 percent since May 2021, raising questions about potential effects on domestic inflation. If imports are billed in foreign currencies, then a strong dollar could reduce import prices and therefore domestic inflation. However, U.S. imports are almost entirely invoiced in U.S. dollars, dampening this effect. We find that the recent appreciation in the U.S. dollar has a negligible effect on domestic inflation as measured by the core price index for personal consumption expenditures.

Keywords: Inflation; US dollar (search for similar items in EconPapers)
JEL-codes: E31 E4 (search for similar items in EconPapers)
Date: 2022
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