Inflation seems to have plateaued. Just ask the latest testimonials from Federal Reserve officials. The central bank continues to maintain a medium term inflation target of 2%. It emphasizes that 3% inflation as a long term goal is too high. This commitment to maintaining a low inflation rate underscores the Fed’s promise made to the public, aiming to stabilize economic conditions.
Given today’s economic realities, we don’t know how or when we will get back to our aspirational goal of 2% inflation. That is just a temporary bump though and analysts say conditions aren’t expected to get much better over the next few months. Rather, the Fed remains direct, realistic, and watchful to future economic changes. Getting to their 2% inflation target will be a long and rocky road.
Even with these developments, the U.S. dollar has been volatile against many major foreign currencies and trade counterparts. The dollar was down 0.09% against the euro and down 0.18% vs the British pound. In comparison, it gained 0.35% against the Japanese yen. It further appreciated by 0.32% against the Canadian dollar and 0.39% against the Australian dollar. The dollar was up 0.12% against the kiwi. It did suffer a minor setback of 0.10% against the Swiss franc.
The responses from the market indicate a very nervous and apprehensive sentiment. Investors and analysts are still digesting what stalled inflation means for future monetary policy moves. The Fed’s resolve to move the inflation measure back to its target range would bump up rates and economic activity across the board.