EFTA Document EFTA01458959

8 December 2015 World Outlook 2016: Managing with less liquidity The impact of the trade-weighted dollar on inflation is much more benign than the impact on growth. According to our FRB/US simulations, the recent dollar appreciation would subtract between one- and two-tenths from core PCE inflation over the next couple of years. This may not seem like much, but core inflation has been running significantly below the Fed's 2% target for the past three years. For inflation to rise toward th