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Published: Tue, September 06, 2016
Economy | By Melissa Porter

Case For US Rate Rise Strengthening - Yellen

Case For US Rate Rise Strengthening - Yellen

Mumbai: Indian investors are unmoved by US Federal Reserve chair Janet Yellen's speech on Friday where she hinted at an interest hike in the world's largest economy with most market players saying a rate revision was unlikely in September.

A government report released today showed that the US economy has expanded slower than previously estimated in the second quarter, as businesses are running down their inventories faster and state and local governments have reduced their spending. Following her remarks, investors continued to bet there were roughly even odds of an increase at the Fed's December policy meeting.

But she's stopped short of signaling any timetable for the next rate hike. The soonest such a move would likely be announced is at the next meeting of the Federal Open Market Committee in September, though most observers believe the Fed will wait until December before officially deciding to raise rates.

TORONTO, Aug 26 Canada's main stock index rose on Friday, led by energy and mining stocks as oil and gold prices gained after a speech by Federal Reserve Chair Janet Yellen viewed as supportive of a USA interest rate increase.

She notes strong gains in employment and strength in consumer spending.

Against the Swiss franc, the dollar gained 1.2 percent to 0.9788 franc, while the euro fell 0.9 percent to $1.1180.

The report said gross domestic product increased by 1.1 percent in the second quarter, reflecting a downward revision compared to the originally reported 1.2 percent growth.

Janet Yellen yesterday declared that the case for another interest rate rise in the United States has "strengthened" - setting the scene for a hike before the end of the year.

Fischer, speaking in an interview with CNBC at Jackson Hole, said "the evidence is that the economy has strengthened".

Yellen did not lay out a clear roadmap for what the Fed needs to see to raise rates.

Some analysts have suggested the Fed will have less flexibility to fight future recessions because there will be less room to cut rates. "So, as long as there's no downside shocks, the economy is moving in the direction where a rate hike is more appropriate", said John Briggs, head of strategy at RBS.

Minh Trang, a senior currency trader at Silicon Valley Bank in California, said: 'The overall takeaway not just from Yellen but for the week is that all the Fed officials have all taken a hawkish bent.

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