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The Federal Reserve’s new policy framework makes it clear that policymakers seek inflation that targets 2% over time, New York Federal Reserve Bank President John Williams said on Wednesday.

Additional takeaways

“Lower neutral interest rates constrain the ability of monetary policy to offset negative shocks to the economy.”

“FOMC participants’ median estimate of neutral nominal rate has fallen to 2.5% from 4.25% in January 2012.”

“Statement on new strategy makes unequivocally clear that we seek maximum employment and will aim to eliminate shortfalls.”

Market reaction

The US Dollar Index preserves its bullish momentum after these comments and was last seen gaining 0.53% on the day at 92.80. 

Expert score

5

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