x
Breaking News
0

Fed’s Yellen sees rate hikes ahead, but few hints on when

EconomyJun 06, 2016 02:48PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Federal Reserve Chair Yellen addresses the World Affairs Council of Philadelphia in Pennsylvania

By Jonathan Spicer and Jason Lange

PHILADELPHIA (Reuters) - Federal Reserve Chair Janet Yellen on Monday gave a largely upbeat assessment of the U.S. economic outlook and said interest rate hikes are coming but, in an omission that stood out to some investors, gave little sense of when.

Overall, a Yellen said, "I see good reasons to expect that the positive forces supporting employment growth and higher inflation will continue to outweigh the negative ones."

While last month's jobs report, released Friday, was "disappointing," and bears watching, policymakers will respond "only to the extent that we determine or come to the view that the data is meaningful in terms of changing our view of the medium- and longer-term economic outlook."

Though she stressed surprises could emerge that could change her expectations, and listed four main risks to the U.S. economy - slower demand and productivity, and inflation and overseas risks - she concluded by downplaying them all and flagging her expectation that "further gradual increases in the federal funds rate are likely to be appropriate."

Still, Yellen was careful not to give any hints about the timing of a next rate increase, in contrast to a speech on May 27, when she said such a move would probably be appropriate "in coming months."

To some investors, the absence of a timeframe in Monday's remarks suggests the Fed will delay its next rate hike well beyond next week, when U.S. central bankers next gather to make monetary policy.

Economists now see September or possibly July as the most likely time for a quarter-point policy tightening, while traders in futures markets are betting on later in the year.

But to others, Yellen's repeated emphasis on the positive aspects of recent economic data continues to suggest a rate hike in the near future.

"The fact that she did remove that timeframe I think just suggests that June’s off the table, July is possible if the data cooperates," said Omar Esiner, chief market analyst for Commonwealth Foreign Exchange in Washington. "She’s a little bit more upbeat in that respect than the Street and I think that was a main takeaway for me.”

The U.S. central bank raised rates from near zero in December in the first U.S. policy tightening in nearly a decade.

Prospects of another hike this month were all but killed by a report last week showing only 38,000 jobs were created in May, somewhat muting recent upbeat data on consumer spending, housing and overall U.S. growth.

Although the jobs report was "concerning, let me emphasize that one should never attach too much significance to any single monthly report," Yellen said at the World Affairs Council of Philadelphia. "Other timely indicators from the labor market have been more positive."

The dollar initially rose following Yellen's comments but later retraced, and financial markets did not give an appreciable signal on whether investors saw more or less chances of a rate hike in the near future. U.S. stock prices were up modestly from levels just before the speech.

While Yellen did not repeat her line from a week-and-a-half ago when she said rate hikes would probably be appropriate in coming months, she said she remained optimistic inflation would rise to the Fed's 2-percent goal because oil prices had reversed their downward path and the dollar had steadied after a long period of gains.

Fed’s Yellen sees rate hikes ahead, but few hints on when
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

 
Are you sure you want to delete this chart?
 
Write your thoughts here
 
Replace the attached chart with a new chart ?
Post
Post also to:
1000
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments
Lawrence Jenkins
Lawrence Jenkins Jun 06, 2016 6:38PM GMT
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Well I listened to the live feed here in London and have to confess after her performance I can't see what all the Yellen was about. She literally gave out a load of verbiage about nothing with the gist being regardless of what I say we still won't be raising interest rates. Good for me as I've invested in gold.
Reply
0 0
JR Ha
JR Ha Jun 06, 2016 6:12PM GMT
Saved. See Saved Items.
This comment has already been saved in your Saved Items
So all those talks about "depend on number" are lie?! and FED wants to add interest regardless what economic number show?!
Reply
0 0
Teodor Kazandzhiev
Teodor Kazandzhiev Jun 07, 2016 4:21AM GMT
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yes. Biggest con-artists in the world. Trying to save a dead horse - the US economy.
Reply
0 0
Alisher Orynbekov
Alisher Orynbekov Jun 06, 2016 5:08PM GMT
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Well, now that we know that expansions do not always die of old age, and the current one is quite ripe aged, we should only watch out for bubble signs. And to hope the fed does not over- or underreact. But can we trust them on that?
Reply
0 0
denis belov
denis belov Jun 07, 2016 4:54PM GMT
Saved. See Saved Items.
This comment has already been saved in your Saved Items
that is the question. its unfortunate we already know the answer
Reply
0 0
 
Are you sure you want to delete this chart?
 
 
Replace the attached chart with a new chart ?
Post 1000
Please wait a minute before you try to comment again.
 
 
 
Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Add Chart to Comment
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email