“Upside risks to the inflation outlook in the near term have increased,” the US Federal Reserve (Fed) stated in its semi-annual Monetary Policy Report released on Friday.
Additional takeaways
More lasting but likely still temporary upward pressure on inflation has come from prices for goods experiencing supply chain bottlenecks.
Survey-based and market-based measures of longer-term inflation expectations have risen since the end of last year.
Inflation expectations in a range that is broadly consistent with longer-run inflation objective.
Fed institutions at the core of the financial system remain resilient.
Data for the second quarter suggest a further robust increase in demand.
Structural vulnerabilities persist at some types of money market funds and bank loan and bond mutual funds.
On Fed's asset purchase program, in coming meetings the committee will continue to assess the economy’s progress toward goals.
The post-pandemic labor market and the characteristics of maximum employment may well be different from those of early 2020.
Fed prepared to adjust stance of monetary policy as appropriate if risks emerge.
As extraordinary circumstances pass, supply and demand should move closer to balance, and inflation is widely expected to move down.
Spate of retirements spurred by the pandemic will continue to weigh on labor force participation for some time.
Recent readings on inflation expectations indicate inflation expected to return to levels consistent with the committee’s 2% longer-run inflation objective after a period of temporarily higher inflation.
No notable effect on treasury market functioning followed the expiration in march 2021 of temporary changes to the supplementary leverage ratio.
Fed's CIE index at levels 'likely more consistent' with fed's longer-term 2% inflation goal.
Most measures of hedge fund leverage are now above their historical averages.
Market reaction
The Fed report has little to no impact on the US dollar index, as it keeps its recovery mode intact around 92.30, as of writing.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD holds gains near 0.6600 after RBA's status-quo
AUD/USD holds gains near the 0.6600 mark early Tuesday. The Aussie fails to find any inspiration, as the RBA holds the key interest rate at 4.35%. Strong China's Caixin Services PMI data underpins the Aussie amid a modest US Dollar uptick and a tepid risk tone. RBA Governor Bullock's presser eyed.
USD/JPY: Rebound remains capped below 152.50 amid cautious mood
USD/JPY consolidates the bounce below 152.50 in Asian trading on Tuesday, tracking the US Dollar price action. The pair's upside remains capped by strong Japanese PMI data and a cautious market mood. Traders remain wary as Americans head to polls this Tuesday.
Gold traders appear non-committal on the US election day
Gold price is miring in five-day lows near $2,730 in Asian trading on Tuesday, lacking a clear direction. Traders remain wary and refrain from placing fresh bets on Gold price on the US presidential election day.
Bitcoin ETFs beat Gold ETFs with 65% gain since launch
Bitcoin ETFs have reshaped the digital asset investment landscape since their approval in January. Their total assets under management climbed over $70 billion during the weekend, placing them ahead of other investment products, including gold.
US presidential election outcome: What could it mean for the US Dollar? Premium
The US Dollar has regained lost momentum against its six major rivals at the beginning of the final quarter of 2024, as tensions mount ahead of the highly anticipated United States Presidential election due on November 5.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.