Aegon AM: Rising dollar means rising global inflation

July 21, 2022

The US Federal Reserve (Fed) believes more rate hikes are necessary to bring inflation back to tolerable levels. However, the rapid set of rate hikes by the Fed will not only damage the US economy, just like previous rate hike cycles it will also hurt the global economy, says Hendrik Tuch, Head of Fixed Income (Netherlands) at Aegon Asset Management.

'The rising dollar ensures other countries are faced with even more inflation pressures as they pay more for dollar-denominated goods, especially commodities. Effectively, the US is now exporting globally both rising inflation and interest rate hikes, which creates problems for countries with a weak financial position and/or a weak trade balance.'