“The Federal Reserve is not politically compromised”, she said. “We had previously thought it was going to be an aggressive Fed rate hiking cycle and it’s clearly not going to be that”. Trump went so far as to say that Yellen, an Obama appointee, “should be ashamed of herself”.
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Yellen reiterated her firm remarks in response to another question about Trump’s comments later in the press conference.
FED WATCH: The Federal Reserve kept its key interest rate unchanged and signaled it is likely to rise later this year. That’s just a week before the presidential election. “That still seems to point to the likelihood of one hike in December, provided there are no shocks in the economic data between now and that meeting”.
“With both the BoJ and the US Fed doing nothing to upset the apple cart, the markets got what they wanted”.
Yellen agreed that the case for an increase in rates was stronger, but that not only was the economy not “overheating” now, but there was actually a “little more room to run”. Three of the 17 policy makers said rates should remain steady for the rest of the year.
Murphy Oil jumped $1.07, or 4 percent, to $27.58, Transocean rose 38 cents, or 4 percent, to $9.52.
New Zealand’s S&P/NZX 50 added 0.42% to 7,311.71, as the Reserve Bank of New Zealand stood pat on interest rates, holding the country’s official cash rate at 2%.
The policymakers also forecast that inflation will almost reach the Fed’s target next year before achieving 2 percent in 2018 and 2019. The Fed now expects two rate increases in 2017 and two in 2018, down from three each year in previous forecasts.
The Fed aims for 2 percent inflation as a buffer against deflation, a harmful decline in prices and wages.
“The Fed lowering its medium-term rate guidance path while keeping a rate hike in play at the end of this year has left the dollar very finely balanced”, said Yujiro Goto, currency strategist at Nomura.
In its updated forecasts, the Fed lowered its expectation for the long-range level of its benchmark interest rate to 2.9 percent from 3 percent in June and 3.5 percent before then. “The market overall was pretty confident you wouldn’t see a rate increase today and we saw that achieved”. Futures prices indicate the chance of a rate hike by December climbed to 61 per cent, from 52 per cent a week earlier. That said, Yellen defended the Fed’s independence again Wednesday, saying its decisions are made without political considerations. But in a statement after their Wednesday meeting, the majority of Fed officials chose “to wait for further evidence of continued progress”. Verizon Communications rose 48 cents, or 1 percent, to $52.35. Until last December, the rate had been near zero.
After its two-day policy meeting, the Federal Open Market Committee voted to hold the federal funds rate between 0.25% and 0.50%, citing progress in economic and labor market growth and an improving risk outlook. In addition to the high likelihood that it will become increasingly hard to maintain its large-volume JGB purchase program for technical reasons, the marginal benefits from expanding JGB purchases have already diminished vs. costs involved, as we have repeatedly mentioned. Its stock climbed $6.62, or 6.6 percent, to $107.24.
Still, analysts hope to glean additional insights into Yellen’s thinking regarding the economy’s sluggish growth and last month’s downshift in hiring.
Real estate companies rose as investors looked for income, as did telecom stocks, which also typically pay higher-than-average dividends. Gains are led by energy and information technology.
Higher interest rates make currencies more attractive to investors.
Traders have been losing faith in the Fed’s ability to diverge from the looser policy stance of central banks in Europe and Japan amid evidence of inconsistent strength in the world’s largest economy.
But there were also already three votes for a rise in rates on the Fed’s policymaking committee and the start of the European day brought the dollar back into positive territory, up 0.2 percent from Wednesday’s close in NY at 100.61 yen.
Dow e-minis were up 73 points, or 0.4 percent at 8:33 a.m. ET (1233 GMT), with 22,132 contracts changing hands.
The Nasdaq Composite .IXIC was up 32.08 points, or 0.61 percent, at 5,327.26, after rising as much as 0.76 percent to a record of 5335.82.
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While hailing a pickup in activity since the sluggish first half of the year, the USA central bank showed uncertainty about some persistent weak signs in the economy, and cut its 2016 growth forecast to 1.8 percent, down from 2.0 percent in June.
