Incentive talk positivity drops dollar
The increasing chance that Congress will do that pass President Joe Biden’s $ 1.9 trillion stimulus plan has fueled fears of a possible inflation spike. As those expectations have risen, so has the popularity of so-called reflation trading, which slashed the dollar this month.
But as testimony to the U.S. Senate Banking Commission, Powell said the central bank would enforce its policy because it drew attention to getting Americans back to work.
“The economy is a long way from our employment and inflation targets, and it will likely be some time before substantial further progress is made,” Powell said.
Powell in 2020 said the central bank would be willing to let inflation exceed target for periods to reach an average of 2%.
While Powell hasn’t allayed inflation fears, the central bank’s general support for the economy has held the dollar afloat Tuesday.
For the dollar, the jury continues to know which direction the next big step will be, but for now Concerns about inflation may be offset by hopes for a faster US economic recovery.as vaccine distribution is expected to increase in the coming weeks, ”said Ronald Simpson, director, global currency analysis for Action Economics.