FXStreet (Guatemala) - Priya Misra, Rates Strategist at BAML noted that one of the most consistent messages from Fed Chair Janet Yellen has been that of a balanced approach.

Key Quotes

"One of the most consistent messages from Fed Chair Janet Yellen has been that of a balanced approach - that when there is a conflict between its objectives, the Fed would tolerate some movement in the opposite direction if the distance from one of the objectives is large. So far this approach has not really been tested - the labor-market recovery is far from satisfactory and inflation has been running well below the Fed's target."

"However, recent inflation readings have been strong and fairly broad based. This runs the risk of inflation reaching the Fed's target sooner than its forecast implies (in 2016). "

"At the press conference last week, Chair Yellen provided a clue about the Fed's response to such a scenario by reiterating the balanced approach. Given the work that remains on the unemployment front, the Fed would not prematurely tighten policy. When asked about the tolerance around overshooting the inflation target, Yellen noted that a "prolonged period" of above or below the target is not desirable."

You May Also Like

COMPANIES IN THIS ARTICLE
Related Forex Analysis
  1. Forex News

    Standard and Poor’s Rating Downgrades EU Outlook Amidst Sustainability Fears

  2. Forex News

    EUR/USD US session wrap up - FXStreet

  3. Forex News

    EUR/USD retreats from 1.0990, back to 1.0950

  4. Forex News

    Fed hike on its way, ISM employment component on track - ING

  5. Forex News

    US Dollar Set for Big Moves - Here are the Strategies We’re Watching

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!