WASHINGTON (MarketWatch) — Inflation in the U.S. shows virtually no sign of moving toward the Federal Reserve’s 2% target, but it’s no longer just because of cheaper oil. Enter the greenback.

Now the strong dollar DXY, +0.03% is also slamming the brakes on inflation, potentially complicating the timing of the central bank’s first interest-rate increase in nine years.

A 50% plunge in the price of petroleum since last summer has pushed the Fed’s preferred PCE inflation index down to a minuscule 0.3% increase over the past year. But with oil prices stabilizing, the biggest constraint on U.S. inflation has becoming a soaring dollar that’s made a variety of foreign goods such as French wine, German autos and Asian-made high-definition televisions less expensive for Americans to buy.

In March, the prices the U.S. paid for imported goods and services fell for the eighth time in the last nine months — even though the cost of foreign oil actually rose for the second straight time. Import prices dropped 0.3% last month, or an even steeper 0.4% excluding fuel.

Over the past 12 months, import prices have fallen by a stunning 10.5%. While cheap oil is the chief reason, even the price of imports excluding fuel have declined by nearly 2% in the same span. That’s the biggest drop in six years.

The sharply lower cost imported goods is a double-edged sword. Americans may pay less for all sorts of goods such as coffee, cell phones and household appliances, stretching their paychecks further. They can also travel more cheaply abroad, especially if they use foreign airlines that have cut prices.

Yet the strong dollar also makes U.S. goods and services more expensive for foreigners to buy, reducing demand for American-made exports. That’s cutting into corporate profits and could even cost American jobs, potentially slowing the nation’s pace of growth.

If the dollar remains strong, inflation is unlikely to rise much in the near future as the Fed has been hoping. The central bank for months had stuck to a prediction that the decline in inflation was a temporary phenomenon that would soon be reversed.

Only in March did the Fed kind of throw in the towel, slashing its estimate of PCE inflation in 2015 to a range of 0.6% to 0.8% from an original estimate between 1.6% to 1.9%. The rate of inflation that Fed officials consider healthy for the economy won’t close in on the bank’s 2% target until 2016, its latest forecast shows.

Yet top Fed officials also gave themselves more maneuvering room in March, stressing that they will raise interest rates if necessary even if inflation stays under wraps. A plurality of the nation’s top economists, however, thinks the Fed should wait until inflation actually begins to rise.

Read: Star economists say Fed should hold off on interest-rate hike