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Is big change of FED monetary policy coming?

Is big change of FED monetary policy coming?

In the emergy facing of the economic effects of the pandemic, the US Federal Reserve is preparing a so-called revision of the medium-term monetary policy framework, in which it will clarify its medium-term goals and the instruments with which it wants to achieve them. Speculation that the Fed will adopt the so-called average inflation targeting in its "monetary policy review", which in other words will mean that monetary policy should ensure that the observed inflation rate averages at least 2%.

White House-backed plan for $1tn in new stimulus that would cut emergency unemployment benefits by two-thirds. Current fiscal aids for americans is extented emergency jobless benefits decreased from $600 a week. Under the Senate plan, enhanced unemployment insurance would be continued — but at just $200 a week in September. From October, workers would receive 70 per cent of previous wages. In addition to the jobless benefit extension, Americans would get a new round of direct payments from the US Treasury, worth $1,200 for most adults, in addition to the amount they received in April.

One of the tools that the Fed will want to use for this will be the so-called yield curve check, where the central bank will not only set short-term interest rates, but will also be ready to intervene in the (government) bond market so that their yields do not exceed a certain level. It can lead not only to long-term real negative dollar interest rates in the long run, but to uncontrolled bond purchases as well as a huge increase in the Fed's balance sheet and money supply.