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24 Feb 2015
Yellen's testimony main driver on Tuesday - ANZ
FXStreet (Bali) - The Research Team at ANZ shares their thoughts on Tuesday's Fed's chair Yellen semi-annual testimony on the economy and monetary policy.
Key Quotes
"Yellen is set to present her semi-annual testimony on the economy and monetary policy tomorrow. There are a few areas we will be watching."
"The first is Yellen’s view regarding the likely start to the rates normalisation process."
"The baseline view of most Fed officials seems to be for a mid-year start, while the market appears to be pricing a later move."
"There is also a reasonably wide discrepancy between the projected path of the Fed’s fund rate by the FOMC and that foreseen by markets."
"The market does not share the same optimism as the Fed about future long-term growth prospects and thus have a lower view on the end point for rates."
"Secondly, with full employment seemingly within sight, Yellen’s view on the expected inflation path will be watched closely."
"Although Fed officials are largely in agreement that the decline in oil prices will only have a transitory impact on headline inflation, the core PCE (and CPI) measures have eased in recent months."This may have altered the Fed’s confidence that inflation will gradually trend to its 2% target."
"Finally, we will be watching discussion around the risk posed by the international environment."
"While the Minutes noted a number of concerns on the international front, there have also been a number of positive developments subsequently: the USD has stabilised, global growth prospects have improved and geopolitical risks have eased.
Key Quotes
"Yellen is set to present her semi-annual testimony on the economy and monetary policy tomorrow. There are a few areas we will be watching."
"The first is Yellen’s view regarding the likely start to the rates normalisation process."
"The baseline view of most Fed officials seems to be for a mid-year start, while the market appears to be pricing a later move."
"There is also a reasonably wide discrepancy between the projected path of the Fed’s fund rate by the FOMC and that foreseen by markets."
"The market does not share the same optimism as the Fed about future long-term growth prospects and thus have a lower view on the end point for rates."
"Secondly, with full employment seemingly within sight, Yellen’s view on the expected inflation path will be watched closely."
"Although Fed officials are largely in agreement that the decline in oil prices will only have a transitory impact on headline inflation, the core PCE (and CPI) measures have eased in recent months."This may have altered the Fed’s confidence that inflation will gradually trend to its 2% target."
"Finally, we will be watching discussion around the risk posed by the international environment."
"While the Minutes noted a number of concerns on the international front, there have also been a number of positive developments subsequently: the USD has stabilised, global growth prospects have improved and geopolitical risks have eased.