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Published: Sat, February 18, 2017
Economy | By Melissa Porter

Yellen signals interest rate rise but not "when" and "how high"

Yellen signals interest rate rise but not

European markets were gaining for most of the day after Federal Reserve Chair Janet Yellen spoke of a possible rate hike next month.

Earlier this week some top Fed officials made public appearances and shared their views on the US central bank's interest rate policy.

The Fed chief was reluctant to speculate on the effects of the Donald Trump administration's proposed policies on the economy, including a tax overhaul and major deregulation in Wall Street and banking.

Mr. McHenry and others, including at least one senator on Tuesday, also said the Fed should wait until the White House fills vacancies on the Fed board of governors, including the role of vice chairman for supervision, before pursuing new rules. Additionally, this was the best monthly job rise since September.

Small business borrowing was up almost 4 per cent over the previous year and a survey of small businesses revealed that only 4 per cent of firms said they couldn't obtain all the credit they desired, she added.

Immigrants help increase the pool of available workers in the U.S. labor force as older workers age out, which is key to increasing slow growth and the "depressingly slow" productivity growth, she said.

Congressional Republicans have criticized the Federal Reserve for favoring Democrats in the past. Testifying before lawmakers on Wednesday, she reiterated that it would be "unwise" for the U.S. central bank to wait too long to raise interest rates.

"It's a requirement that they finance the lending that they want to do with a certain amount of capital, and not only with debt".

Rob Carnell, chief worldwide economist at ING, said Yellen "seemed to us to be a little more hawkish than usual". Yellen also revealed that she intends to complete her term at the helm of the Fed that ends early next year.

Her responses were frank and fearless. That "could risk disrupting financial markets and pushing the economy into recession", Yellen said.

Thomson Reuters data shows traders see a 17.7% chance of a 25-basis-point hike in rates at the Fed's March meeting.

Overnight, the USA dollar rose against a basket of the other major currencies on Tuesday after Federal Reserve Chair Janet Yellen said in congressional testimony that the US central bank would consider raising interest rates at its upcoming meetings.

Yellen, who will testify before the House Financial Services Committee later on Wednesday, said that a "rate increase will likely be appropriate in upcoming meetings" if the economic recovery stays on course, which saw the dollar rally and United States stocks hit new records.

Canadian stocks are poised to extend record highs Wednesday, but a flurry of mostly positive economic data may ratchet expectations for monetary policy tightening ahead of schedule.

The Federal Reserve intends to move with some dispatch to raise interest rates, although acting as soon as its next meeting in March is up in the air.

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