Federal Reserve
Federal Reserve
The Federal Reserve System, more commonly known as the Fed, represents the central banking system of the United States. Like other central banks globally, the Fed is responsible for monetary policy, in this case in the US. The Fed is one of the most watched and followed entities for forex traders, given its material impact on the US dollar. Founded initially in 1913, the Fed was created to perform a wide range of functions. This includes stabilizing and maintaining flexible monetary policy in the US while buttressing a financial system for the country. Its general duties are setting and guiding monetary policy and overseeing effective economic operation, both of which are at the service of the public interest. by the Board of Governors of the Federal Reserve System. The current interest rate and the expectations of future interest rate changes can influence the value of the US Dollar. For example, if traders anticipate a change in interest rates based on announcements from the Board of Governors, this can cause the US dollar to appreciate or depreciate in value against other currencies. Forex traders should always be aware of meetings and announcements from the Fed and should keep track of developments within the central bank. Ultimately, the Federal Open Market Committee (FOMC) holds eight regular meetings per calendar year, where policies and interest rates are discussed and agreed upon. The best course of action is to keep up with news ahead of these meetings as a forex trader to make predictions about interest rates, and whether to buy or sell the US dollar.
The Federal Reserve System, more commonly known as the Fed, represents the central banking system of the United States. Like other central banks globally, the Fed is responsible for monetary policy, in this case in the US. The Fed is one of the most watched and followed entities for forex traders, given its material impact on the US dollar. Founded initially in 1913, the Fed was created to perform a wide range of functions. This includes stabilizing and maintaining flexible monetary policy in the US while buttressing a financial system for the country. Its general duties are setting and guiding monetary policy and overseeing effective economic operation, both of which are at the service of the public interest. by the Board of Governors of the Federal Reserve System. The current interest rate and the expectations of future interest rate changes can influence the value of the US Dollar. For example, if traders anticipate a change in interest rates based on announcements from the Board of Governors, this can cause the US dollar to appreciate or depreciate in value against other currencies. Forex traders should always be aware of meetings and announcements from the Fed and should keep track of developments within the central bank. Ultimately, the Federal Open Market Committee (FOMC) holds eight regular meetings per calendar year, where policies and interest rates are discussed and agreed upon. The best course of action is to keep up with news ahead of these meetings as a forex trader to make predictions about interest rates, and whether to buy or sell the US dollar.
Read this Term Powell interview, earlier post is here:
More now, highlights via Reuters:
- process of getting inflation down to fed’s 2% goal will ‘include some pain’
- one thing we really cannot do is to fail to restore price stability
- ultimately it would be more painful if we don’t deal with high inflation and let it get entrenched
- allowing high inflation would mean a much deeper downturn
- we think it would be appropriate for there to be additional 50 bps rate hikes at next 2 fed meetings
- if things get better than we expect we’re prepared to do less; if worse, we’re prepared to do more
- “you’ve seen this committee adapt to the incoming data and the evolving outlook. and that’s what we’ll continue to do.”
- there are pathways to a soft landing
- with perfect hindsight, would be better for us to have raised rates sooner
- asked about labor market remarks, says “when i said unhealthy, what i really meant was that there’s an imbalance between demand and supply, and companies can’t find workers.”
- the committee and i are firmly committed to getting inflation back down to 2%
- labor demand and supply imbalance a ‘significant part of the inflationary story’
- we want is wages that are consistent with 2% inflation
- asked what he is thinking in five words or less, says “get inflation back under control”
That final point is historic. It may well be the first time ever a central banker has said anything in 5 words or less.
