Billionaire hedge fund investor Ray Dalio, author of the new book How Countries Go Broke, discusses President Trumps trade policies and the value of the U.S. dollar.
The U.S. dollar experienced a volatile trading day on Monday in the wake of the U.S. joining Israel in attacking Iran’s nuclear facilities.
The dollar strengthened during the Monday morning trading session, rising as much as 0.71% as investors flocked to the greenback, reaching its highest level since May, according to the WSJ Dollar Index, which measures the dollar against a basket of currencies.
As afternoon approached, the dollar gave up those gains and was down over 0.3% during mid-afternoon trading.
The dollar’s slide occurred after dovish comments from Federal Reserve Governor Michelle Bowman suggesting that the central bank could cut interest rates as soon as its meeting next month.
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The dollar fluctuated in the wake of U.S. strikes on Iran as well as dovish commentary from Federal Reserve officials. (Getty Images/Photo illustration / Getty Images)
The Federal Reserve last week held its benchmark federal funds rate target unchanged at a range of 4.25% to 4.5%, citing economic uncertainty amid looming tariffs that could hit consumer prices more broadly.
Fed Chair Jerome Powell noted that the labor market is roughly at or near maximum employment and that inflation is somewhat above the Fed’s 2% longer-run goal, leaving the central bank in position to act if economic conditions deteriorate.
Bowman spoke at a research conference in Prague, Czech Republic, and said that the central bank will have opportunities to review more inflation and labor market data ahead of their next meeting, which could open the door for the first rate cut in 2025.
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Federal Reserve Governor Michelle Bowman said she could see interest rates cuts occurring next month if economic data supports such a move. (Photographer: Al Drago/Bloomberg via Getty Images / Getty Images)
“If upcoming data show inflation continuing to evolve favorably, with upward pressures remaining limited to goods prices, or if we see signs that softer spending is spilling over into weaker labor market conditions should be addressed in our policy discussions and reflected in our deliberations,” Bowman said.
“Should inflation pressures remain contained, I would support lowering the policy rate as soon as our next meeting in order to bring it closer to its neutral setting and to sustain a healthy labor market,” Bowman said.
Her comments come after another Fed governor, Christopher Waller, said last week that the Fed could cut rates starting in July.
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President Donald Trump appointed Jerome Powell as Fed chair in 2017, though he has been sharply critical of the Fed’s approach to monetary policy. ( SAUL LOEB/AFP via Getty Images / Getty Images)
The Fed lowered interest rates by 100 basis points last year, including a 50-basis-point cut in September followed by a pair of 25-basis-point cuts in November and December.
President Donald Trump has repeatedly criticized the central bank and Powell for declining to cut interest rates, calling him “Mr. Too Late,” among other insults.
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Trump has at times suggested that he may attempt to remove Powell from his role, though federal law could preclude such a move.