Central banks are behaving in a normal manner once again – Commerzbank

The US Dollar Index snapped a three-day winning streak on Tuesday with the initial reaction to FOMC Chairman Jerome Powell's comments on the policy outlook. Ulrich Leuchtmann, Head of FX and Commodity Research at Commerzbank, shares his opinion about Powell’s interview.

Central banks should decide to explain the rules of their actions rather than predicting their next move

“How would you implement monetary policy, dear readers, if you were central bank chairs? You would look at the data coming in and act accordingly. That is exactly what the Fed Chair is telling us.”

“I find it silly and tiring wanting to deduct what the central bankers are allegedly planning. What they are going to do depends on the data. We should be pleased that all this forward guidance stuff is coming to an end and that central banks are behaving in a normal manner once again.”

“Central banks should decide once again to explain the rules of their actions to us rather than predicting their next move. That is a much better way of anchoring inflation expectations.”