NEW YORK (AP) – Stocks were mostly lower on Wall Street in early afternoon trading on Friday, giving up modest gains following a generally upbeat assessment of the economy from Fed Chair Janet Yellen.
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The Fed has policy meetings in September, November and December.
“As ever”, she said, “the economic outlook is uncertain, and so monetary policy is not on a preset course”.
As for when that next hike may be coming, Gross thinks if August’s job growth number is “decent” then “for sure or close to for sure” the Fed will raise rates by 25 basis points in September.
Investors also digested the second read on second-quarter USA gross domestic product, which showed growth of 1.1%, down from the initial read of 1.2%. Another possibility is after the Fed meeting in December. That was when it raised its benchmark lending rate from near zero, where it had been since the depths of the financial crisis in 2008.
The job market is humming, and so are the USA financial markets, with major stock indexes near record highs. “I think that’s something they wouldn’t want to deal with”.
However, going forward, she said the Federal Open Market Committee (FOMC) expected a moderate GDP growth and an improvement in the labour market.
Fischer said on CNBC TV that the Fed was still on track to raise rates this year.
The case for increasing US interest rates has “strengthened in recent months”, Janet Yellen, the chairperson at the US Federal Reserve said.
The Fed lifted rates from record low levels in December 2015 but further moves have been delayed after a bout of financial markets volatility early this year, a first quarter slowdown in the USA and uncertainty surrounding the United Kingdom vote to exit the European Union.
Viktor Nossek, director of research at WisdomTree Europe, does not expect a rate rise imminently, despite Yellen’s comments. “Jackson Hole has done nothing to trigger a rate hike in the USA”, he said. According to data from the CME Group this week, investors foresee only about a 21 percent probability of a rate hike in September and only about a 52 percent chance by December. “But even if average interest rates remain lower than in the past, I believe that monetary policy will, under most conditions, be able to respond effectively”, she added.
But to combat future downturns, she said the Fed should explore other options, too. But she said those options would require more study.
Fed leaders have sometimes used the Jackson Hole event to announce major policy shifts.
“Most global currencies are down against the USA dollar”, he said. He’s saying growth is more a productivity and investment story.
Crude oil prices increased as Yellen’s speech began. “So, as long as there’s no downside shocks, the economy is moving in the direction where a rate hike is more appropriate”, said Briggs.
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The rally that drove the S&P 500 to a series of records since early July lost some momentum amid the recent hawkish remarks from Fed officials and uneven economic data, though Friday’s gains restored the gauge back near the upper end of a roughly 30-point range that’s been in place for three weeks.
