Speaking at a three-day worldwide gathering of central bankers in Jackson Hole, Wyoming, Yellen said the “U.S. economy was nearing the Federal Reserve’s statutory goals of maximum employment and price stability”.
Advertisement
Bloomberg’s Dollar Spot Index, which tracks the currency against 10 peers, dropped 0.5 percent as of 10:29 a.m.in NY.
“As ever”, she said, “the economic outlook is uncertain, and so monetary policy is not on a preset course”.
Yellen, Chairwoman of the Board of Governors of the Federal Reserve, hinted at an interest rate increase, possibly as early as September.
Asked whether Fed watchers should be looking for such a move in September, and possibly for two hikes this year, Fischer said Yellen’s remarks were “consistent with answering “yes” to both of your questions”.
Such a view is “exaggerated”, Yellen said, because the Fed will be able to buy bonds and make pledges about future policy to lower interest rates.
Among a raft of Australian economic data to be released this week, the June quarter capital expenditure data and July retail trade data on Thursday will be closely scrutinised by markets.
The chances of a 25 basis point rate hike at the Fed’s 14 December policy meeting stood at 57.2%, the CME’s Fed Watch toll showed. U.S. stock prices fell in choppy trading, while prices of U.S. Treasuries were mostly weaker.
About the economy, Yellen repeated what she has said several times before.
The pound initially added a cent against the U.S. dollar as traders saw no hint at a timetable for a rate increase in the remarks though the gains later faded.
A report on Friday showed the U.S. economy grew at a slower pace than previously estimated for the second quarter. “Based on this economic outlook, the FOMC continues to anticipate that gradual increases in the federal funds rate will be appropriate over time to achieve and sustain employment and inflation near our statutory objectives”.
The MSCI All-Country World index was down 0.1 percent by, after slipping to its lowest level since August 9, while the pan-European 600 fell 0.2 percent.
“Really it’s a number of other Fed officials around the Fed that have been suggesting certainly one rate hike looks very likely this year, and maybe even two”, Paulsen said.
Advertisement
The price of West Texas Intermediate oil, the USA benchmark, was up 20 cents to $47.53, while the price of Brent crude, the global benchmark, increased 5 cents to $49.72. Those with savings accounts would receive slightly larger interest payments, while people taking out mortgages or business loans would pay higher rates.
