Yellen: Appropriate for Fed to proceed cautiously with rate hike
By FXStreet Janet Yellen, Chair of the Federal Reserve, said today in New York that the central bank must move with caution regarding interest rate hikes given the current outlook. She mentioned that inflation expectation may have drifted lower. It is “too early to tell” if the recent pickup in core inflation is durable according to Yellen.
Regarding the economic outlook, she said that global risks remain in place, but the risk from overseas to the United States is likely limited. She noted that the Fed has tools to provide more accommodation even in the case that rates return to zero.
Taking into account the impact on the US dollar, the market took a dovish interpretation of Yellen’s speech. Greenback tumbled in the market while stock indexes jumped. Gold rose further while crude oil prices moved off session lows. Rate hike expectations among traders declined.
Key Quotes:
“Global developments have increased the risks associated with that outlook. In light of these considerations, the Committee decided to leave the stance of policy unchanged in both January and March.”
“Although the baseline outlook has changed little on balance since December, global developments pose ongoing risks. These risks appear to have contributed to the financial market volatility …read more
Source:: FX Street
