28.08.202012:28 Forex Analysis & Reviews: Fed changes approach to economic recovery

On Thursday, the Fed announced changes on its monetary policy, which indicates that the central back has picked up a new approach to economic recovery, that is, giving new weight to the strengthening of the US labor market, achieving maximum employment and stable prices, and less concern about too high inflation.

"It's not surprising that Fed Chairman Jerome Powell doesn't want to raise interest rates," said Vincent Reinhart, chief economist at Mellon. According to Reinhart, what is surprising is that the Fed has enshrined a degree of tolerance for inflation in its document.

The policy shift is arguably the biggest for the Fed since Paul Volcker turned the central bank into an inflation-killing force four decades ago, when prices were spiraling.

Powell's new political plan, designed for a world with low interest rates, low inflation, and slower economic growth that will last for a long time, puts the labor market first.

"Our revised policy includes the advantage of a strong labor market, especially for low-income communities, by including support, thereby not pushing inflation," Powell explained.

The Fed released a number of articles and studies on the topic, including one claiming that targeting average inflation would help a wide range of Americans benefit from the economy.

Issues such as income distribution have traditionally been considered outside the purview of the Fed, but differing economic results from recent studies have led to the conclusion that the economy, as a whole, can benefit from more inclusive policies.