Search ForexCrunch

Michael Hanson, head of global macro strategy at TD Securities, points out that the Fed officials have begun undertaking a full-scale review of their operational framework.

Key Quotes

“This review will include policy strategies, the toolkit, and communications with markets and the public. Two things not on the list are the Fed’s dual mandate and its longer-run 2% inflation target.”

“However, Fed officials are looking at “make-up” policies that explicitly promise to overshoot 2% inflation for a time, in the hope that this will make policy more effective near the zero lower bound.”

“We expect increasing attention on these proposals over the next several months, but think the practical challenges to implementing them may ultimately preclude their adoption.”

“Any changes to the Fed’s policy framework are not imminent, as the review is not scheduled to be completed until sometime in 2020.”