Jerome Powell, the Federal Reserve Chair, spoke today about monetary policy during an event organized by Laubach Research. He emphasized the growing uncertainty in the global economy and the need for a flexible approach to monetary policy. Powell highlighted that the central bank should be prepared for more frequent supply shocks and greater inflation volatility in the future. He also pointed to the need to adapt monetary policy frameworks to new realities and the importance of clear and transparent communication with the market.
Powell's key statements:
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Inflation expectations must remain stable - this is a key element of the Fed's actions.
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We may be entering a period of more frequent supply shocks, which will require greater flexibility in monetary policy.
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Policy frameworks should continue to account for risks associated with very low interest rates.
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In the face of major economic shocks, clear communication about uncertainty regarding economic outlook is necessary.
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Policy frameworks should be resilient to a wide range of macroeconomic conditions.
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It's worth reconsidering the average inflation targeting strategy.
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The language used in communications about economic shortages should also be reanalyzed.
Essentially, we didn't learn anything new following the last Fed conference. Consequently, there was no market reaction after the speech. EURUSD is trying to continue rebounding, while US500 is preparing for another test of the 5900 level.
