Lael Brainard, a member of the Board of Governors of the Federal Reserve System, recently delivered a speech discussing the Federal Reserve’s policy for achieving a two percent inflation goal. She reiterated the Federal Reserve’s FAIT policy, a strategy that uses a flexible average inflation targeting strategy for achieving two percent inflation. The aim, according to Governor Brainard, is to keep inflation moderately above two percent for some time, allowing the economy to make up for any short falls along the way due to running below the two percent goal.
Governor Brainard would like to see the Federal Reserve focus on achieving full employment particularly for low and moderate income U.S. households. Price inflation has not been as responsive to labor market tightness as it has in the past, The Federal Reserve aims to eliminate shortfalls to maximum employment of human capital.
I didn’t hear anything in Governor Brainard’s comments that would have a direct impact on the interbank markets, whether for foreign exchange or for overnight loans.