Dollar hits fresh 18-month high as hot inflation boosts Fed hike expectations
TLT•The dollar rose to an 18-month high after stronger-than-expected September inflation revived expectations for a Federal Reserve rate hike later this month. The dollar index gained 0.68% to 102.86, while traders saw a 56% chance the Fed would leave rates unchanged at its October 27-28 meeting.
1. Inflation lifts dollar
The dollar hit an 18-month high on Wednesday after stronger-than-expected US inflation data revived expectations for a Federal Reserve rate hike later this month. Consumer prices rose sharply in September as gasoline costs surged, and strategists said the higher core inflation reading raised concern that energy-driven price pressures were spreading across the economy.
2. Rate and currency moves
The dollar index rose 0.68% to 102.86, its highest since April 2025. Traders saw a 56% chance the Fed would leave rates unchanged at its October 27-28 meeting, compared with 53% a month earlier, while pricing in about 79 basis points of tightening by late 2027. The euro fell 0.69% to $1.1121, reaching a 17-month low against the dollar; sterling fell 0.58% to $1.3178 and the yen weakened 0.33% to 158.81 per dollar.
