Tuesday, 21 November, 2017

Yellen Hints at Possible US Interest Rate Hike

GETTYTrump could trigger a shock fall in markets fear experts GETTYTrump could trigger a shock fall in markets fear experts
Jeannie Matthews | 15 February, 2017, 00:57

The New Zealand dollar fell after Federal Reserve chair Janet Yellen kept open the chance of a rate hike next month as the world's biggest central bank tightens monetary policy, pushing up yields on US Treasuries and stoking demand for the greenback. Indeed, while Yellen declined to specify how fiscal policies will impact the pace at which the Fed will remove its monetary policy accommodation, waiting too long would be "unwise" and could potentially force the FOMC to raise rates too quickly, disrupting financial markets, and raising the risk of a US recession.

However, the policymaker was more aggressive than expected - and even appeared to raise some questions over the leader's plans after saying "economic and fiscal policy face an uncertain path under the administration of Donald Trump".

While she stressed that she would not weigh in on specific tax or spending proposals, she repeated "the importance of improving the pace of longer-run economic growth and raising American living standards with policies aimed at improving productivity".

Yellen didn't mention during her prepared remarks when rates will be increase.

Financial markets specialist Professor James Angel from Georgetown University explained why: "Often politicians will want central banks to do things that are short term expedient, but long term unsafe for the economy".

She said that the Federal Open Markets Committee expects the U.S. economy "to continue to expand at a moderate pace, with the job market strengthening somewhat further and inflation gradually rising to 2%".

Yellen is testifying Tuesday to the Senate Banking Committee and will do so Wednesday to the House Finances Services Committee. A forecast of four interest rate rises in 2016 turned out to be one.

The Fed's next policymaking meeting is in March, but investors are betting the Fed will not increase its benchmark interest rate until a meeting in mid-June.

Flower prices soar as Valentine's nears
Lafayette-area florists are preparing for last-minute Valentine's Day shoppers while completing orders that are already placed. American Airlines worldwide flower shipments for Valentine's Day ramped up over the first week of February as well.

US stocks on Tuesday had small gains and losses.

Both during his campaign and after his election, President Trump accused Yellen of keeping interest rates low to politically benefit the Obama administration.

Other officials have been more direct.

Still, she added: "We're confident the economy is on a solid course and we have some ability to address weakness by cutting the federal funds rate, if needed".

"People are just waiting for Yellen's testimony, and depending on what she says, the dollar could test the upside again", said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo. This judgment reflects our view that US monetary policy remains accommodative, and that the pace of global economic activity should pick up over time, supported by accommodative monetary policies overseas.

On how she'll "deal with" three new Fed governors to be appointed by Trump, as Sen.

Silver: $18.01 USA per ounce. A few days later, Trump signed an executive order kick-starting his review of current financial regulations and oversight procedures.

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