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10Y dollar fed fomc yellen

The Queen Bee Speaks: Full Yellen Summary

"Fed Chair Janet Yellen says an increase in fed funds rate will likely be appropriate at FOMC’s March 14-15 meeting if policy makers determine that employment, inflation continue to evolve in line with expectations."

Update:

retarded

Good cop, bad cop.

First the Fed “unleashed the Bullard” to explain why the incoming econ data in fact doesn’t support a March hike.

Next up was the queen bee (Lil’ Kim reference alert). Here are the talking points via Bloomberg..

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Fed Chair Janet Yellen says an increase in fed funds rate will likely be appropriate at FOMC’s March 14-15 meeting if policy makers determine that employment, inflation continue to evolve in line with expectations.

  • “Indeed, at our meeting later this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate,” Yellen said Friday in text of speech in Chicago
    • Even so, monetary policy isn’t on a preset course; FOMC is ready to adjust assessment of appropriate path for policy if unexpected events materially change outlook
    • Committee generally sees labor market strengthening further, inflation at or near 2% in medium term
  • Waiting too long to scale back some support could require more rapid rate increases down the road
  • Confident in Fed’s judgment that gradual removal of accommodation is likely appropriate; gradual rate increases likely needed in months, years ahead to keep economy from overheating; no evidence Fed is behind the curve
    • Cumulative 0.75ppt of rate increases envisioned by FOMC in December for this year would be consistent with “gradual pace”
  • Process of scaling back accommodation won’t likely be as slow as in 2015-2016, absent new developments that might materially worsen outlook
    • Slower-than-expected increase in rates during those years reflected more than just inflation, job market and overseas developments; surprisingly sluggish productivity growth in U.S. and abroad suggested that fewer hikes would be needed than previously thought
  • U.S. economy has exhibited “remarkable resilience” in face of shocks over recent years; events since mid-2016 have reinforced FOMC’s confidence that economy is on track to achieve full employment, price stability
    • Job gains have remained solid, 4.8% unemployment is in line with median FOMC estimate of long-run normal level; higher energy prices may have temporarily boosted inflation
    • Prospects for further moderate economic growth look encouraging, risks from abroad appear to have receded; risks to outlook are roughly balanced
  • While economy shows great improvement, important challenges remain; real GDP growth averaging only ~2% per year, real incomes for some families still lower than before crisis
    • Unwelcome developments reflect structural hurdles that are beyond reach of monetary policy
  • Difficult to say how low current neutral rate is; assessment of impact created by post-recession headwinds is subject to great uncertainty; FOMC generally expects neutral real fed funds rate to rise to long-run level over next few years

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Sounds pretty hawkish. Or not…

yellen

 

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1 comment on “The Queen Bee Speaks: Full Yellen Summary

  1. Curt Tyner

    Janet is playing with Yo Heads.

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