dglobalnews.com Janet Yellen tells Congress to expect more rate hikes
Published: Thu, July 13, 2017
Culture&Arts | By Orlando Mckenzie

Janet Yellen tells Congress to expect more rate hikes

Janet Yellen tells Congress to expect more rate hikes

The U.S. dollar continued to be lower against its major counterparts in the European session on Wednesday, after the Fed Chair Janet Yellen asserted that the central bank is expected to raise rates gradually over time to attain inflationary target and sustain the economic expansion.

On Wednesday, Yellen was asked the same question in a different way later by another lawmaker: Did she anticipate that this would be her last appearance before the House Financial Services Committee?

The report also echoes Fed statements that activity slowed in the first quarter largely due to transitory factors, including a lull in consumer spending, notably on energy given the unseasonably warm winter. The latest USA economic reports, particularly for jobs, have been upbeat.

The Dow is up 1,769.54 points, or 9 percent.

The economy is growing at a moderate pace, expected to pick up in H2. It ended 0.85 percent lower on Tuesday, taking the year-to-date gains to 11.7 percent.

That "has to be an important piece to understand what has happened", she said.

She said the Fed was committed to relying primarily on interest rates as its key policy tool and noted that many of her colleagues thought one further rate increase would be warranted this year. The dollar index .DXY reversed course to fall 0.04 percent, while the euro rose 0.26 percent to $1.1429. The bank cited recent strong data that bolstered confidence in stronger growth.

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Yellen's remarks offered a fairly upbeat assessment of the American economy.

Yellen will give her semi-annual monetary policy testimony before Congress later on Wednesday and on Thursday, and investors will be parsing it for clues on when the Fed will start reducing its massive balance sheet.

All in all, Yellen's commentary should keep a dovish tone for investors.

[W] e would push back again any "dovish" interpretation of the testimony associated with the fact that Yellen said, "Because the neutral rate is now quite low by historical standards, the federal funds rate would not have to rise all that much further to get to a neutral policy".

Furthermore, the neutral interest rate for the United States economy was now quite low.

Fed officials have said they plan on lifting rates at least once more in 2017 and commencing a reduction of its bloated $4.5 trillion balance sheet, which could act as an additional tightening measure.

However, Yellen said there was uncertainty about how inflation would respond to shrinking slack in the economy.

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