The Fed waited more than seven years to begin the rate hiking process. Maybe she´s worried about who Trump is going to put on Board and if she´ll be on Board next year. However, trying to go faster will probably make her lose the status of “most successful fed Chairperson” ever she´s beginning to amass.
Janet Yellen intends to hold firm against market pressure as her press conference showed yesterday. The 0.25% rise in federal funds was downgraded to a modest move, wholly anticipated by investors, while hinting at a moderate path in rate hikes over the next couple of years.
At Jackson Hole, Janet Yellen dwelt extensively on the challenges raised by low neutral rates, recognizing the need to broaden the unconventional toolkit for compensating for the subdued impact rate cuts might have in future. By hinting the Fed should reinforce its weaponry, just in case there is an unexpected and most unlikely bout of recession, Janet Yellen is sending the wrong message.
James Alexander via Historinhas | Market Monetarists must hope that Mark Carney doesn’t seek to defend the pound, but let currency weakness do it’s magic, monetarily offsetting any expected economic weakness. A drop in the pound is not like a drop in the price of a company after a profit warning that reflects a weaker future.
BoAML Research | One reason the Federal Reserve has been so dovish recently has been a lack of conviction in wage and price inflation. Fed Chair Janet Yellen ’ s speech earlier this week confirmed that she is not convinced that the recent rise in core inflation would “ prove durable ” and stated that more adverse -than -expected foreign developments could slow the pace of labor market improvement, and with it, “ growth in both wages and prices.
James Alexander via Historinhas | Hamlet without the Prince would not be a very good play. Janet Yellen’s March 29th speech features a world economy without the Fed. It’s not a very good description of the world economy.
In her speech yesterday to the US Congress, Fed chair Janet Yellen made it clear that rates will remain stable over the coming months, despite concerns over China and global growth. The Fed’s monetary policy has no pre-established direction and, if it needed one, it would be adusted to meet the objectives entrusted to the institution. But the problem is that the market will demand more from the Fed.
In an attempt to out-macho the US and impress Germany , the ECB under Trichet decided to stamp on headline inflation hitting nearly 3% in early 2011, while core remained solidly below 2%.
Today the Fed’s FOMC holds its first meeting of 2016 with 4 planned board changes. In summary, we can say that 1 hawk (hard line) will be leaving and 4 joining. This means that the balance is still in favour of the doves (soft line), but less so than in 2015.The markets will react positively if the Fed sends a clear message that it will take into account the situation of both the US and the global economy before implementing further rate hikes.
James Alexander via Historinhas | Where are the John Maynard Keynes’ and Milton Friedman’s when you need them? The Fed, led by Janet Yellen and Stanley Fischer, has made a huge mistake in tightening monetary policy. The other members of the FOMC are largely irrelevant noise, with the possible exception of the NY Fed’s Dudley, though all carry blame.