Fed’s Musalem: People remain concerned about inflation at the current level

St. Louis Federal Reserve (Fed) President Alberto Musalem said on Friday that “people remain concerned about inflation at the current level,” adding that inflation expectations remain anchored.

Musalem said that the Fed “must return inflation to 2% on a timely basis” and noted that current excess inflation is due to energy shocks and the AI buildout.

The table below shows the percentage change of US Dollar (USD) against listed major currencies today.

US Dollar was the strongest against the New Zealand Dollar.

The Fed has two mandates: to achieve price stability and foster full employment.

When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy.

When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

It is a non-standard policy measure used during crises or when inflation is extremely low.

It was the Fed’s weapon of choice during the Great Financial Crisis in 2008.

From FXStreet