Fed’s Daly: Economy will need longer period of support due to virus


Federal Reserve's Daly has said that the economy will need longer period of support due to virus, talking on Bloomberg TV..

Key comments

  • Will continue to do everything to support economy.
  • Have room to run economy well beyond maximum employment.

Market implications

Going forward, the Fed that shifts to an average inflation targeting is likely to leave rates on hold for an even longer period than is currently envisaged.

USD would therefore remain under pressure for the foreseeable future for the Fed’s dovish resolve is not in doubt.

A shift to average inflation targeting is likely to cement their commitment even further. That, combined with virus-thwarted rebound prospects and the ongoing positive reappraisal of EUR’s long-term prospects following Europe’s fiscal burden sharing accord, leave the USD in very poor shape over the medium term,

analysts at Westpac expained. 

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