question archive The Federal Reserve (the US central bank) announced in August 2020, that it would no longer be setting an inflation target at 2 percent, but it would allow inflation to increase above the 2 percent threshold
The Federal Reserve (the US central bank) announced in August 2020, that it would no longer be setting an inflation target at 2 percent, but it would allow inflation to increase above the 2 percent threshold
Subject:BusinessPrice: Bought3
The Federal Reserve (the US central bank) announced in August 2020, that it would no longer be setting an inflation target at 2 percent, but it would allow inflation to increase above the 2 percent threshold. As a result, the value of the Australian dollar significantly increased relative to the US dollar to 74 US cents per AUD. (source: https://www.abc.net.au/news/2020-09-01/feds-fudged-inflation-target-what-it-means-in-australia/12618090)
Discuss the relation between US inflation and the USD/AUD exchange rate, and what the implications are for Australian investors, consumers, and businesses. Do you expect the USD/AUD exchange rate to increase or decrease in the future, and why?
