Live Comments Dollar dives as Fed adopts flexible form of average inflation targeting

    Dollar dives as Fed adopts flexible form of average inflation targeting

    Fed Chair Jerome Powell indicates in the Jackson Hole speech that the central bank is adopting a “flexible form of average inflation targeting”. That is, Fed would target to achieve inflation that “averages 2 percent over time”. Therefore, following periods when inflation has been running below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.

    Dollar is sold off after as Powell deliver the speech. Markets see that Fed would keep monetary policy loose for longer, to allow inflation to overshoot 2%.

    Powell’s full speech here.

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