Federal Reserve Chair Janet Yellen comments on today’s decision by the Fed’s policy-setting Federal Open Market Committee to leave rates unchanged during a news conference in Washington. Below we present the key points of her speech:
- clearly the market expects Fed rates to remain low over the next 10 years
- cautious approach to monetary policy is apprioprirate (negative for USD),
- Q1 slowdown in consumer spending appears to be temporary,
- pace of labor improvement has slowed markedly,
- important not to overreact to 1-2 weak jobs reports, we will be watching carefully,
- much of the shortfall in inflation continues to reflect energy and imports,
- core inflation ’close’ to 1.5%, expects it will rise to 2% over next 2-3 years,
- median growth expectations slightly lower.
Yellen with no surprise presents cautious stance. The shifts in the dot-chart were crucial for USD. However, EURUSD has moved a bit lower and the pair is now traded around 1.1255. On the other hand, more cautious FED is good news for equitiy markets. During Q&A session J. Yellen underscored significance of the upcoming British referndum as it has increased uncertinity at global markets. The "Brexit" may impact path of rate hikes in the US.
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