Fed's Clarida: Overshooting inflation will help meet the 2% average target
|Federal Reserve's vice chair, Richard Clarida, has stated that their models suggest overshooting inflation will help meet the 2% average target.
Last week, he was saying that he expects the Fed to keep its current $120 billion pace of bond purchases at least through this year.
"My economic outlook is consistent with keeping the current pace of purchases throughout the rest of this year."
Market implications
The markets will be fixated on Joe Biden's stimulus plan announcements on Thursday.
Joe Biden hinted that he will go big on Thursday with a stimulus proposal worth 'trillions', and the market expects a focus on immediate relief and a larger package that will come down the line.
The combination of the Fed and government stimulus is expected to weigh on the dollar for the longer haul, although from a technical standpoint, there is a bullish case playing out.
If the market has already baked in the fact of ongoing stimulus and lower rates, then the dollar has plenty of ground to correct.
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