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Federal Reserve Bank of Chicago President Austan Goolsbee said late Monday that the US central bank needs more clarity before going back to cut the interest rates.  Key quotes If the administration enacts policies that drive up prices then, by law, the Fed has to think about it.Auto parts suppliers have expressed concerns about tariffs.Before the Fed can go back to cutting rates the Fed needs more clarity.Still to be determined what the entire administration’s policy package entails.Fed has to take a wait-and-see stance.   Market reaction  At the time of writing, the US Dollar Index (DXY) is trading 0.08% higher on the day to trade at 106.75.  Fed FAQs Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. 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. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. 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 Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. 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. In extreme situations, the Federal Reserve may resort to a policy named…

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Filed under: News - @ February 25, 2025 12:23 am