The 10% Depreciation in the Dollar Will Boost Inflation by 0.3 Percentage Points

Apollo Chief Economist

There is already upward pressure on inflation from tariffs, oil prices, and immigration restrictions, and the chart below shows the impact on inflation of a 10% and a 20% depreciation in the dollar. The bottom line is that we should see inflation move higher over the coming months; that is what the consensus expects, what the Fed expects, and what we expect.

Impact on US CPI of a 10% and a 20% depreciation in the US dollar
Note: 5% depreciation shock applied to Q1, Q2, Q3, and Q4. Sources: Bloomberg SHOK model, Apollo Chief Economist

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