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August 28, 2020

US Federal Reserve looks to inflation to save jobs

By Paul Dennis

28 August

In a historic move, the US Federal Reserve announced a new monetary policy strategy aimed at building a strong labour market and stabilising prices.

The new policy is a shift from the decades long strategy of curbing inflation.

James Picerno, editor at the US Business Cycle Risk Report, shared an article on the Federal Reserve’s new monetary policy strategy.

The new strategy aims to target 2% average inflation, a big departure from the previous policy to curb inflation.

The strategy is aimed at building a strong labour market, which will require a range of policies apart from a supportive monetary policy.

The policy change is still unclear as no guidelines have been provided on how long interest rates will be kept low and how high inflation will be allowed to go.

Investors may need to wait until September when the Federal Reserve issues guidance on interest rates and ensures to keep inflation at a threshold of 2.25% or 2.5%.

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