FOMC

The dot plot for September 2022 shows the median rate at the end of 2022 at 4.4%, up from 3.4% in June 2022. For 2023, the median Fed fund target rate is ...

[ Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on foreign exchange. on inflation, the Fed does not see inflation returning to target 2% until 2025. However, an increase in the money supply does not necessarily mean that there is inflation. The consumer price index then increases, generating inflation.How Does Inflation Affect Forex?The level of inflation has a direct impact on the exchange rate between two currencies on several levels.This includes purchasing power parity, which attempts to compare different purchasing powers of each country according to the general price level. - 2024 sees steady unemployment 4% – 4.6%. In doing so, this makes it possible to determine the country with the most expensive cost of living.The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates on the forex market.Interest rates are also impacted. What leads to inflation is a faster increase in the money supply in relation to the wealth produced (measured with GDP). As such, this generates pressure of demand on a supply that does not increase at the same rate. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. - The dot plot for September 2022 shows the median rate at the end of 2022 at 4.4%, up from 3.4% in June 2022.