Back
24 Feb 2015
Yellen unlikely to tip her hand on key questions - Nomura
FXStreet (Bali) - According to Nomura US Ecomomist Lewis Alexander, Yellen is not expected to tip her hand regarding whether or not the FOMC is likely to drop the reference to being “patient” or whether or not the Committee is still on track to raise short-term rates in June.
Key Quotes
"On Tuesday and Wednesday Federal Reserve Chair Yellen will present the Federal Reserve’s Semiannual Monetary Policy Report to Congress. The core issues are the trajectory of interest rates and how the Committee is likely to communicate its intentions in coming meetings."
"We suspect that Yellen’s testimony will be more backward looking than forward looking. She speaks for the FOMC. The Committee seems divided. In recent public statements a number of FOMC participants – Plosser, Lacker, Williams, Bullard and Mester – have suggested that increasing interest rates in June may be appropriate, while the minutes of the January FOMC meeting reported that “many” FOMC participants believe that shortterm interest rates should be kept at the lower bound “for longer.”
"We think Yellen will seek to present the Committee’s views on key issues without sending strong signals about decisions that the FOMC has not made yet. In particular, we do not expect Yellen to tip her hand regarding the key questions of whether or not the FOMC is likely to drop the reference to being “patient” from its next statement and whether or not the Committee is still on track to raise short-term rates in June. The likelihood of both those outcomes seems lower in the wake of the January meeting minutes, but given the apparent divisions within the Committee, we do not expect Yellen to send a strong signal one way or another."
"Yellen may try to generate more room to maneuver in two areas. First, she may try to reinforce the message that the adjustment in interest rate after “liftoff” will be data dependent. Second, she may argue that the decision to drop the Committee’s reference to being “patient” from the statement does not imply that an interest rate increase is likely to follow on some fixed schedule. We expect Chair Yellen to address the core questions the Committee is asking itself as it considers raising its target for short-term interest rates."
Key Quotes
"On Tuesday and Wednesday Federal Reserve Chair Yellen will present the Federal Reserve’s Semiannual Monetary Policy Report to Congress. The core issues are the trajectory of interest rates and how the Committee is likely to communicate its intentions in coming meetings."
"We suspect that Yellen’s testimony will be more backward looking than forward looking. She speaks for the FOMC. The Committee seems divided. In recent public statements a number of FOMC participants – Plosser, Lacker, Williams, Bullard and Mester – have suggested that increasing interest rates in June may be appropriate, while the minutes of the January FOMC meeting reported that “many” FOMC participants believe that shortterm interest rates should be kept at the lower bound “for longer.”
"We think Yellen will seek to present the Committee’s views on key issues without sending strong signals about decisions that the FOMC has not made yet. In particular, we do not expect Yellen to tip her hand regarding the key questions of whether or not the FOMC is likely to drop the reference to being “patient” from its next statement and whether or not the Committee is still on track to raise short-term rates in June. The likelihood of both those outcomes seems lower in the wake of the January meeting minutes, but given the apparent divisions within the Committee, we do not expect Yellen to send a strong signal one way or another."
"Yellen may try to generate more room to maneuver in two areas. First, she may try to reinforce the message that the adjustment in interest rate after “liftoff” will be data dependent. Second, she may argue that the decision to drop the Committee’s reference to being “patient” from the statement does not imply that an interest rate increase is likely to follow on some fixed schedule. We expect Chair Yellen to address the core questions the Committee is asking itself as it considers raising its target for short-term interest rates."