Low rates and the reduced correlation between unemployment and inflation have led to the revision of the Federal Reserve framework, Federal Reserve Chairman of Cleveland Loretta Mester told Yahoo Finance on Friday.
“The Fed wants inflation to rise above 2% for a period of time after it gets low.”
“The main thing is to want to anchor inflation expectations and the inflation rate allowed above 2% will depend on the economy.”
“The forward guidance and explanation of our policy will be part of the Fed’s toolbox.”
“The closure has created a very deep hole and despite positive economic gains, we have not returned to where we were in February.”
“The US economy could end the year down 6% from last year and unemployment could remain high.”
The US dollar index largely ignored these comments and was last seen losing 0.7% on a daily basis to 92.35.