The Federal Reserve Board of Governor, Christopher J. Waller made a
speech on his outlook on the U.S. economy on 19th October 2021 at Stanford
Institute for Economic Policy Research Associates Meeting. The Governor discussed crucial points that might affect the prices of trades in the financial markets.
The Fed, which is short for the Federal Reserve System, is the central bank of the United States and is responsible for making and implementing monetary policies to help the countries’ economic growth, inflation, employment rates, and other financial decisions for the States. This huge role of the Fed as a major policymaker gave the power to its officials to impact the value of the U.S dollar and other assets in the trading market by sharing their comments and future strategies.
Waller’s main focus in this speech was to share their approach for the upcoming year in terms of making major changes in their policy that will depend on the inflation numbers for the upcoming months. The inflation rate has been observed to be high and continues to rise in the past few years, which has made the Governor worried as he showed his concern and shared his future plans to control it.
There are three major takeaways from Waller recent speech i.e.
1. The third quarter for the GDP growth showed a “significant slowdown” but Waller predicted hopes for it to show positive progress in the first 6 months of next year.
2. According to the statistic shared by the Governor, there has been positive growth in the employment sector as the labor market has shown signs of “healing”.
3. The final and important point discussed by the Fed official, was the concerns for high inflation numbers and the need to implement a “more aggressive policy” next year if the possible tapering from next month, did not show significant improvement in controlling inflation.
After the speech, the trading market showed some fluctuations as according to the reports, the U.S. dollar that was on the risky low for the past few weeks rebounded a little in the Asian and European markets. This might have happened due to the Governor stating that they might increase the interest rates earlier than they decided after monitoring the inflation figures and will finally decide in November’s meeting.
The overall performance of the U.S. dollar was still low and according to the financial analysts, it will continue to decline in the upcoming days. Furthermore, Waller also supported the idea of implementing QE tapering from next month which might affect the U.S. dollar rates, pushing it towards a rise.
Predictions are being made by the experts that in the long run, if the Fed goes through with all of Waller’s suggestions, then the U.S. dollar might show a noticeable rise in its value in the year 2022 profiting the long position holders.