Over the past five days, the S&P 500 has fallen 0.68%, the Dow Jones Industrial Average slid 0.85%, and the Nasdaq dropped 0.37%. The chart, distributed with her speech, undercuts the Fed’s own “dot plot” of expected rates by showing the potentially broad range of possible outcomes, from the policy rate spiking above 3.0 percent by the end of 2017 or falling again to zero with a 70 percent probability.
Advertisement
Speaking in Jackson Hole, Wyoming, on Friday after a Fed policymaker and other economists proposed a radical overhaul of central banking, Yellen argued that bond purchases and the ability to pay interest on excess reserves as well as forward guidance would be enough to combat any downturn.
The Commerce Department released a report before the start of trading showing a slight downward revision to the pace of US economic growth in the second quarter.
Spot gold rallied 1.5 percent to $1,341.60 an ounce and the US dollar index fell 0.6 percent after Yellen spoke, but bullion later gave back all its gains and the greenback rallied 0.7 percent after Fed Vice Chair Stanley Fischer suggested that rate hikes were on track for this year.
She pointed to steady gains in employment and strength in consumer spending.
Giving an upbeat take on the economy, Federal Reserve Chair Janet Yellen says the case for raising interest rates is getting stronger. “It doesn’t appear she’s pounding the table saying rates are going up next month”. The economy actually grew at less than half that pace and forecasts since then have generally proved rosier than reality.
In advance of Yellen’s speech Friday, several Fed officials met Thursday with about 120 activists from the Campaign for Popular Democracy’s Fed Up coalition.
Since exiting the recession in the summer of 2009, the US economy has been growing sluggishly, making it the slowest recovery since World War II. If Yellen retains a neutral tone, in spite of expectations for a clearer signal on rates, gold could claw back some of that lost ground, analysts said.
Gross domestic product figures for 2016 are one-tenth of a percent below the projected rate of 1.2 percent.
The Canadian dollar, meanwhile, was down 0.44 of a cent at 76.92 cents US.
Wholesale gasoline was little changed at $1.52 a gallon, heating oil slipped 1 cent to $1.50 a gallon and natural gas rose 2.5 cents to $2.871 per 1,000 cubic feet.
CURRENCIES: The dollar fell to 100.46 yen from 100.57 yen the previous day.
Elsewhere in commodities, the December gold contract advanced US$1.30 to US$1,325.90 an ounce, October natural gas went up 2.8 cents to US$2.91 per mmBTU and September copper contracts remained relatively unchanged.
Advertisement
In commodities, USA crude oil inched up 2 cents to $47.35 a barrel after rising 56 cents, or 1 per cent, on Thursday.
