Yellen’s remarks for the Senate:
- Cautious approach on rates allows time to assess if economic growth is rebounding and if outlook for labor market, inflation will improve
- Available indicators point to ’noticeable step-up’ in Q2 GDP. Consumer spending helped by solid income growth
- Fed to assess whether growth, jobs and inflation will gain
- China faces significant challenges to rebalancing
- Pickup in household spending makes her optimistic that jobs market and overall economy will improve over next few months
- Reiterates that FOMC expects to gradually raise rates
- Tentative signs of wage growth finally picking up
- Watching jobs market carefully to see if slowdown transitory
- Stock market forward P/E ratios well above three-decade median
Markets reaction is extremely limited, there is nothing new in the speech, Yellen confirms data dependant approach and a possibility of a hike this year. Remarks are consistent with a press conference last week.
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