The Fed’s chief, Jerome Powell said the economy progress in the United States nowadays is not enough to to make the central bank tightening its monetary policy. There is more. 

The US inflation may be stronger in several months ahead too before its declining again. In a meeting held in June, the committee discussed about the economy progressive to their target.

That was counted since the asset purchase implementation in the last December. That was said by Powell for his testimony in the congress on Wednesday. He also stated another thing. 

Basically, Powell agree that there is a meaningful economy recovery progress. However, the employment sector is still far from the pre-pandemic condition. The achievement is standard.

The Employment Market Condition Increases

The continued substantial progress is still so far. However, the participants of the FOMC meeting hope that the progress will be continued. That was a said by Jerome Powell. 

The condition in the employment market is increasing, but it is still far from the target. The job acceptance is predicted will be stronger some months ahead in line with several situations. 

The examples are like the increasing health condition of the society and some factors related to the pandemic which starts to decline. That Powell’s statement comes with the effect. 

The example is for the US dollar which was slipping down yesterday.  The index of USD declined by 0.36% to 92.44 when this news was written. 

The Statement is not that Surprising

The Powell’s statement made yesterday night is not a surprising thing. He just try to reflect the consensus in FOMC. He also repeats what has been stated in that FOMC meeting. 

In its newest meeting, they said that the continued progress is still needed. The correction in dollar is able to be seen. However, that dissapointment is just temporary. 

For your information, yesterday night is also a time when the US producers inflation data or PPI was released. The result is positive just like the CPI data yesterday. One thing needs to note. 

That report was not enough to add the strength of Dollar to respond the Powell’s testimony. The PPI increased to the 1.0% in June which was higher than the expectation of 0.6%.

Elsewhere, the New Zealand Dollar is Strong

The New Zealand Dollar becomes a currency with the best performance in an Asian trade session yesterday. That is after the New Zealand Central Bank or RBNZ did something. 

They stopped their obligation purchase program. The NZD/USD lifted by more than 1 percent up to reaching its highest record in one session. That was around the 0.7020 level. 

Meanwhile, the AUD/NZD slipped by 0.75% to the lowest position in a month. It is exactly in the level of 1.0620. In a meeting yesterday morning, a deal was reached. 

The RBNZ agreed to maintain their interest rate level in 0.25% and continue the funding for lending program based on the market expectation. However, they alsob announced something. 

RBNZ will Stop the Obligation Purchase Program

In the same occasion, RBNZ surprisingly announce to end the obligation purchase program soon. The Central Bank will stop the added asset purchase under the Large Scales Asset Purchase or LSAP. 

That will be done in 23 of July 2021. That institution said that this step is needed to fulfill the inflation speed target and employment in a middle-term period. However, their decision is more aggressive. 

RNBZ clearly has been changing their tactical. The inflation and employment risk failed to reach their target. It has been changing to become a risk that beyond the target. 

It is especially if the stimulus or monetary level this time is still maintained. The economist is now predicting that RBNZ will start to increase their interest rate level in August.