As stated by Yellen, the Federal reserve (fed) continues to believe that “gradual increase in the base rate over time will be the right measure in order to keep employment and inflation at the target level. In recent months, according to Yellen, the reason for the rate hike intensified. However, she stressed that the fed’s decision to raise rates continues to depend on incoming macroeconomic data. The exact timing of a rate hike she didn’t call.
The markets reacted to Yellen’s words ambiguous. After the speech, the fed Chairman the dollar against the Euro increased from €0,884 €0,889, then dropping to €0,882. The dollar against the ruble immediately after the words Yellen grew up with of 64.71 to 64,97 rubles, but then began to fall, by 17:40 GMT 64,29 amounting to RUB us Stocks in all major sectors grew, the papers of U.S. banks (Bank of America, JPMorgan, Goldman Sachs, Citigroup and Wells Fargo) rose from 0.9% to 2%.
Yellen noted the positive statistics on unemployment in the last three month were created on average for 190 thousand new jobs). Inflation, despite the fact that continues to be below the target mark of 2%, should, expects the fed in the coming years to accelerate to the required level.
The fed chief also noted positive changes in the US economy, which is caused by significant growth of household expenditure, however, indicated that business investment activity remains weak, and growing from mid-2014 the dollar limits export opportunities.
During her speech, Yellen stressed that he considers effective tools that the fed used to combat the effects of the financial crisis (buying of bonds under QE and keeping rates low for a long time).
As stated by the Financial Times analyst, Brean Capital’s Peter Tchir, Yellen’s speech could be interpreted in two ways. On the one hand, she stressed the growing likelihood of raising the base rate. On the other — pointed to the gradual nature of the increase. Ian Hatzius from Goldman Sachs said the FT that after Yellen’s remarks, he believes that the rate may be increased in September in case of favorable employment data.
Launched on Friday, August 26, a three-day conference in Jackson hole (Wyoming), which is organized by the Federal reserve Bank of Kansas city, is one of the main events of the year in the financial world. The conference includes leading financial and economic experts, heads of Federal reserve banks, and the heads of the major Central banks of the world (this time at the conference attended by the head of the Central Bank of Japan Governor Haruhiko Kuroda, ECB Executive Board member Benoit coeure and the Governor of the Bank of Mexico Agustin Carstens). Special attention in this year’s conference attracted in connection with the market expectation that the fed will allude to the increase in the base rate.