Speaking alongside Lagarde and Kuroda, the President of Fed Jerome Powell mentioned that the US economy is getting closer to hitting the bar for reducing asset purchases. As mentioned in the Senate on Tuesday, Powell reiterated that interest rate hikes are still a long way off.
According to the Fed chairman, transitory inflation means that inflation spikes will not lead to higher inflation. They consider the current peak to be due to supply constraints meeting very strong demand. The Fed would respond if inflation remains too high for too long, Powell warned.
Regarding growth, Powell mentioned that estimates for third-quarter GDP have dropped, but remain at strong levels.
Market reaction
The US dollar remains at daily highs, having the best performance in months. The DXY heads the highest close in months above 94.00 and the EUR / USD is testing 1.1600.
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