Austan Goolsbee, president of the Federal Reserve Bank, said at the end of Thursday that he did not understand the arguments that the US central bank should reduce the rates so that the government’s debt is cheaper, the fine concerns jobs and prices.
Key quotes
Before April 2, the Tariffs of the Liberation Day Hard Data on the Economy looked solid.
Since then, there has been a potential disruption, ambiguity that the Fed must solve.
He says that the arguments that the Fed should reduce the rates so that the government debt is cheaper, the fine concerns jobs and prices.
The Fed building is not a luxury building.
Buildings must be renovated and made with a high level of safety.
Few tariffs have increased inflation.
Companies in the Middle West are still not certain about what is to come.
Market reaction
During the press, the American dollar index (DXY) increased by 0.06% on 97.65.
Fed FAQ
The monetary policy in the USA is shaped by the Federal Reserve (FED). The Fed has two fines: to achieve price stability and support full employment. Its main tool to achieve these goals is to adjust interest rates. When prices rise too quickly and inflation is above 2% of the Fed target, it raises interest rates, increasing the cost of the loan throughout the economy. This causes a stronger American dollar (USD) because it makes the US a more attractive place for international investors to park their money. When inflation drops below 2% or the unemployment rate is too high, the Fed may reduce interest rates to encourage loans that are weighing on the green garden.
The Federal Reserve (FED) organizes eight political meetings a year, in which the Federal Committee of the Open Market (FOMC) assesses economic conditions and makes monetary political decisions. Twelve Fed-Siedmiu officials of the Governors’ Council, president of the Federal Reserve Bank in New York and four of the other eleven regional presidents of the Bank of Reserve, who serve annually on the basis of trading, took part in FOMC.
In extreme situations, the federal reserve may resort to a politics called quantitative draw (QE). QE is a process in which the Fed significantly increases the credit flow in the detained financial system. It is a non -standard policy measure used during crises or when inflation is extremely low. It was a Fed weapon by choice during the great financial crisis in 2008. This includes Fed printing more dollars and using them to buy high -quality bonds from financial institutions. QE usually weakens the American dollar.
Quantitative twist (QT) is the opposite QE process, in which the federal reserve stops buying bonds from financial institutions and does not reinvest the capital from the bonds that it has in order to buy up-to-date bonds. This is usually positive for the value of the American dollar.
