Commenting on FOMC Chairman Jerome Powell’s speech at the Jackson Hole Symposium, “the committee seeks to achieve average inflation of 2% over time,” TD Securities analysts noted. Therefore, after periods when inflation has been consistently below 2%, an appropriate monetary policy is likely to aim to achieve inflation moderately above 2% for some time.
That’s the new key line on inflation in the new statement of longer-term strategy and goals discussed by the president in his Jackson Hole speech. This, along with new wording on the job, results in a more accommodating reaction function, although a more accommodating reaction function was already evident in actions and speeches. “
The president did not specify what ‘moderately above 2%’ means. We believe that means up to 2.5%. There was also no new information on the tools part. and the journal’s communication practices.However, the strategy part having been completed, the emphasis is now placed on taking into account the average inflation target (ACI) in the forecast for the fund rate. “
“The move to AIT is hardly a surprise, but reinforces the fact that the real return advantage of the USD has been lost. It poses a challenge for the USD from a cyclical perspective and gives more credibility to reduce the long-standing overvaluation of the USD. Tactically, the USD shorts are deeply entrenched, but that doesn’t mean it needs to undergo a reversal. “