Investing.com – Federal Reserve (Fed) chair Janet Yellen is expected on Friday to keep the November 2 monetary policy decision “live” for markets as the generally dovish central bank chief wrestles with a growing number officials who are pushing for a return to policy normalization.
Yellen is scheduled to deliver a speech on “Macroeconomic Research After the Crisis” at the Federal Reserve Bank of Boston’s Annual Research Conference on Friday at 1:30PM ET (17:30GMT), according to the Federal Reserve’s website (the Boston Fed’s agenda for the conference lists Yellen as giving a keynote address at 12:30PM ET).
The appearance could be an opportunity for the Fed chair to give hints on her current stance on the timing of the next rate hike.
On Wednesday, the minutes from the September policy meeting showed a growing number of Fed officials were of the opinion that policy tightening should occur this year.
"Several members judged that it would be appropriate to increase the target range for the federal funds rate relatively soon if economic developments unfolded about as the Committee expected," the minutes of the Sept. 20-21 meeting said.
The minutes added that "it was noted that a reasonable argument could be made either for an increase at this meeting or for waiting for some additional information on the labor market and inflation."
At the September meeting three out of the 10 Fed members with voting rights this year dissented from the decision based on their preference to hike the current 0.25% to 0.50% range in rates by 25 basis points.
Since then, the tide of Fed opinion appears to have become more hawkish, with several policy makers commenting that it would be appropriate to hike this year.
Last week, even the generally dovish Chicago Fed president Charles Evans admitted that he would be “fine” with an increase in interest rates this year as long as the economy continued to progress and inflation accelerated.
If Yellen opts to comment on monetary policy at Friday’s speech, she is largely expected to reiterate the message that “all meetings are live”.
There are two more meetings scheduled this year, on November 1-2 and December 13-14.
However, several analysts have argued that the Fed would be “unlikely” to move next month with the policy decision set for release less than a week before the November 8 presidential elections. The general assumption is that the Fed would wish to avoid the move appearing to be political.
Some experts have also suggested that the central bank would refrain from a rate hike in a meeting without a follow-up press conference with Yellen in order for her to be able to explain the decision.
Furthermore, markets currently put the probability of a rate hike at the November meeting at only 7.2%, according to Investing.com's Fed Rate Monitor Tool.
Odds have been creeping up for a move at the end of the year on the back of some solid economic data and hawkish comments from Fed officials.
Fed fund futures currently price in the chance a hike in December at 69.2%.
While waiting for Yellen's appearance, this is the state of the markets at 10:29AM ET (14:29GMT):
The dollar moved higher against other major currencies on Friday, as expectations for a 2016 U.S. rate hike continued to support.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.29% at 97.81, just off Thursday’s seven-month high of 98.12.
Gold prices held steady on Friday, as a higher U.S. dollar weighed on the precious metal and market participants remained cautious ahead of the day's events.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were little changed at $1,256.65.
Meanwhile, U.S. stocks traded higher. The Dow Jones gained 141 points, or 0.78%, while the S&P 500 traded up 15 points, or 0.70%, and the tech-heavy Nasdaq Composite advanced 39 points, or 0.74%.
Stay up-to-date on market expectations for future Fed policy moves by visiting:
http://www.investing.com/central-banks/fed-rate-monitor