Key Points:
- Governor Stephen Miran spoke at Boston University on Monday.
- He stated the falling dollar is not currently a major issue.
- The decline is too small to spike consumer price inflation.
- Monetary policy remains unchanged despite the currency’s movement.
Federal Reserve Governor Stephen Miran sent a clear message to Wall Street and Main Street alike on Monday: do not panic about the dollar. During an appearance at the Boston University Questrom School of Business, the central bank official downplayed recent trends showing a decline in the value of the U.S. currency. According to him, the situation is under control and does not require an emergency response.
For weeks, economists have watched the dollar soften against other global currencies. Typically, this raises alarm bells about inflation. When the dollar is weak, it costs more to buy goods from other countries, which can drive up prices at the store for regular Americans. However, Miran argued that the current dip is simply not deep enough to matter.
“The kind of decline seen in the dollar doesn’t matter that much for consumer inflation,” Miran explained to the audience. He noted that while the numbers on the charts are moving, they have not moved enough to hit consumers in the wallet. The link between the currency’s value and the price of everyday goods is not as direct as some fear, at least not right now.
He did add a small warning, however. Miran clarified that this calm attitude only applies to the current slow slide. If the dollar were to suffer a “very dramatic” crash, the conversation would change instantly. But as things stand, the Federal Reserve sees no reason to lose sleep over the exchange rate.
This view is crucial for investors trying to guess the Fed’s next move. If the central bank were worried about the dollar, it might raise interest rates to boost its value. Miran shut that idea down. He stated clearly that he does not view the decline as something that has “material consequences for monetary policy thus far.”
Essentially, the Fed is sticking to its game plan. They are focused on jobs and stable prices, not micro-managing the daily fluctuations of the currency market. For now, the weaker dollar is just a statistic, not a crisis.
