The Takeaway …
Federal Reserve Board Governor Christopher Waller reiterated today that the Federal Reserve would not conduct monetary policy for the purpose of keeping interest rates low solely to service debt or maintain asset-based purchase for the purpose of financing the government. The remarks, made at the Peterson Institute for International Economics, also focused on the Federal Reserve’s political independence. While Section 13(3) of the Federal Reserve Act encouraged cooperation between the U.S. Treasury and the Federal Reserve when combating shocks to the U.S. economy, Governor Waller reminded the audience that pursuant to the U.S. Treasury-Federal Reserve Accord of 1951 the Federal Reserve was under no obligation to monetize the U.S. debt at a fixed rate.
Traders should be keeping their eyes open for political tensions that veer the Federal Reserve off course from its statutory mandate of maintaining stable prices and full employment. Governor Waller made it clear that the entire Board was in lock step about debunking the narrative that the Federal reserve was conducting monetary policy solely to service debt. Right now I cannot say whether the Board has been receiving any signals from the Executive Branch to change policy. If there were any tensions, they were not being reflected in today’s foreign exchange rates which appear mostly unchanged.
| Currency pair | 29 March 2021 7:15am | 29 March 2021 8:48pm | Percentage change |
| EUR/USD | 1.7700 | 1.1768 | -0.000017 |
| AUD/USD | 0.7648 | 0.7632 | -0.21 |
| GBP/USD | 1.3832 | 1.3771 | -0.44 |
| USD/JPY | 109.5600 | 109.7800 | 0.20 |
| NZD/USD | 0.6997 | 0.7005 | 0.11 |
| USD/CHF | 0.9395 | 0.9387 | -0.000085 |
| USD/NOK | 8.5782 | 8.5444 | -0.004 |
| USD/SEK | 8.6867 | 8.6816 | -0.000059 |
| USD/CAD | 1.2592 | 1.2588 | -0.000032 |
