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Federal Reserve’s Vice Chairman Richard Clarida said on Friday that they do not target dollar levels but added that they are not oblivious to the effects dollar can have demand on inflation, as reported by Reuters. 

Additional takeaways

“Headlines about the dollar often overlook what happened in the prior 3-4 years.”

“Dollar level now is only a little below its average level of the last 5 years, not something that causes me concern.”

“Inflation used to be dispersed more evenly across all categories of goods and services.”

“Goods-producing inflation has been low but services inflation has been closer to our target since the 1990s.”

“There is going to be enough demand in the economy this year but not enough to warrant policy change.”

“Have not made up my mind yet on how much scarring there will be.”

“Fed staff is following sectoral effects in job market closely.”

“I see back to February level of GDP sometime in the second half of this year.”

“It is a bit murkier to know when we will recoup the lost growth.”

Market reaction

These comments were largely ignored by market participants. As of writing, the US Dollar Index was up 0.05% on the day at 89.86.