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Regarding the possible deployment of yield curve control, Federal Reserve’s Vice Chairman Richard Clarida said that it was in the tool kit but reiterated that it wasn’t something that they were looking at at the moment. “There’s potentially a place for it but it is most robustly a complement to forward guidance and large scale asset purchase programs,” Clarida explained.

Additional takeaways

“We believe in many circumstances it would be appropriate to aim for a modest overshoot to show inflation can operate on both sides of the goal.”

“We don’t think this is the time to revisit the history of 2%.”

“FOMC will continue to survey participants’ views on long-run growth and employment four times a year.”

“Fed did achieve 2% inflation as recently as two years ago.”

“Likely that discussion of other tools will now resume with the conclusion of framework review.”

“Threshold-based guidance is in the tool kit and potentially has a role.”

“I would image we will be returning to a discussion of our guidance.”

“Inflation expectations are critical to policy but they are unobserved.”

“International factors are crucial and are very relevant to the discussion.”

“There is global downward pressure on riskless rates.”

“There are very powerful global disinflationary forces.”

Market reaction

The US Dollar Index edged slightly higher in the last minutes and turned flat on the day near 92.30.

 

Expert score

5

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