Future nostalgia

The Fed’s new monetary policy framework looks aggressive in some ways. It allows the FOMC to pursue average inflation targeting and run the labour market hotter to facilitate this. But their revised economic projections show that meeting these goals remain as far away as ever. The pandemic has not changed this yet. If the Fed is serious, it’ll need to pursue policy more aggressively. No new stimulus measures now mean it will have to do more later. That’s why the FOMC meeting was dovish. And why we will continue to live in a weak dollar world.

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