As the world’s best investment manager and financial market journalist, I bring you the latest insights from the Federal Reserve Chairman Jerome Powell’s post-meeting press conference.
Key takeaways from Powell’s statement:
- “Upside risks to inflation have decreased.”
- “Downside risks to employment mandate are real now.”
- “Policy rate is clearly restrictive.”
- “Time is coming when it will begin to be appropriate to dial back restriction.”
- “We’ll get a lot of data between now and September.”
- “We’ve seen some tendency to have a narrowing base of job creation some months, but not in others.”
- “We do look at private demand extra carefully.”
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover. The value of the USD is significantly influenced by the Federal Reserve’s monetary policy, which aims to achieve price stability and full employment. Changes in interest rates by the Fed impact the value of the USD – raising rates can strengthen the USD, while lowering rates can weaken it.
In extreme situations, the Federal Reserve can implement quantitative easing (QE) to increase the flow of credit in the financial system, which usually leads to a weaker US Dollar. Conversely, quantitative tightening (QT) is the process of reducing the flow of credit by the Fed, which can have a positive effect on the US Dollar.
Analysis:
Jerome Powell’s decision to leave the policy rate unchanged indicates a cautious approach to managing inflation and employment. The statement suggests a potential shift towards easing restrictions in the future, depending on the data received leading up to September. As an investor, it’s important to monitor the Federal Reserve’s actions and statements, as they can impact the value of the US Dollar and financial markets globally.