Powell speech: Unlikely new Fed framework on inflation will change global role of dollar

It's unlikely for the Federal Reserve's new framework on inflation to change the global role of the dollar, FOMC Chairman Jerome Powell said on Tuesday, as reported by Reuters.

Additional takeaways

"Premature to even think about normalizing the size of the Fed balance sheet."

"Will start to think about normalization issues only after a whole lot more progress on employment, inflation goals."

"We do not want disinflationary dynamic seen in other parts of the world to take root in US."

"Strong capital markets, democratic institutions including independent Fed are the sources of dollar's reserve role."

"US needs to sustain those conditions for dollar to keep its global role."

"Until pandemic is in the past banks, regulators cannot be complacent about financial conditions."

"Fed has important but limited role in addressing economic inequality."

"Will require a response across government to narrow economic gaps by race and gender."

"Focus on tight labor markets should help ease inequality at the margin as more are drawn into jobs."

Market reaction

The US Dollar Index ignored these remarks and was last seen losing 0.22% on the day at 92.44.