Fed's Hammack says “now” is the time to tackle inflation
Cleveland Federal Reserve (Fed) President Beth Hammack crossed the wires on CNBC on Thursday as the Jackson Hole Symposium begins. She was hawkish, saying that the recent inflation figure was expected, that “now” is the time to tackle persistent inflation and that monetary policy is not restrictive for the economy in the United States (US).
Key highlights:
Most recent inflation number was as expected.
Now is time to act given persistence of inflation.
I do not see Fed policy providing restriction for economy.
Above target has been persistent amid questions of how shocks will play out.
The main worry is that public will lose confidence inflation will return to 2%.
Contacts highly concerned about inflation and living expenses.
Concerned inflationary mindset may be taking hold.
You recognize neutral monetary policy when you see it.
Neutral rate seen higher than other Fed officials.
My neutral rate projection on upper end of committee range.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.01% | 0.04% | 0.00% | -0.12% | -0.31% | -0.01% | -0.20% | |
| EUR | 0.00% | 0.05% | -0.02% | -0.15% | -0.32% | -0.10% | -0.20% | |
| GBP | -0.04% | -0.05% | -0.04% | -0.21% | -0.35% | -0.16% | -0.26% | |
| JPY | 0.00% | 0.02% | 0.04% | -0.14% | -0.29% | -0.13% | -0.19% | |
| CAD | 0.12% | 0.15% | 0.21% | 0.14% | -0.16% | 0.03% | -0.05% | |
| AUD | 0.31% | 0.32% | 0.35% | 0.29% | 0.16% | 0.20% | 0.10% | |
| NZD | 0.00% | 0.10% | 0.16% | 0.13% | -0.03% | -0.20% | -0.06% | |
| CHF | 0.20% | 0.20% | 0.26% | 0.19% | 0.05% | -0.10% | 0.06% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Author
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
