Bank Of America To Fed: Weakening Dollar Signals Coming Inflation

The steady weakening of the U.S. dollar against other major world currencies could push inflation up faster than investors have expected, providing the Federal Reserve additional justification to raise interest rates in the months ahead.

That’s the conclusion of analysts at Bank of America Merrill Lynch, who examined the impact of currency prices on domestic inflation. If correct, the analysis would vindicate Fed Chair Janet Yellen, whose repeated assertion that the forces holding back inflation are merely “transitory” has been challenged by skeptics.