Article by ForexTime
Federal Reserve Hair Janet Yellen gave a speech late on Friday, signaling that an interest rate hike was warranted later this year although the central bank’s decision depended on the data. She shifted the focus back to jobs and away from inflation (and wage inflation in particular).
“An important factor working to increase my confidence in the inflation outlook will be continued improvement in the labor market,” Yellen commented.
The US dollar was volatile during Yellen’s speech although has not moved far from recent ranges, as there were no surprises in her comments and she stayed her dovish course, with a general tone of “cautious optimism” in the economy.
“Some recent studies have raised the prospect that the economies of the United States and other countries will grow more slowly in the future as a result of both demographic factors and a slower pace of productivity gains from technological advances,” Yellen said.
She added that:
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“At an extreme, such developments could even amount to a type of ‘secular stagnation,’ in which monetary policy would need to keep real interest rates persistently quite low relative to historical norms to promote full employment and price stability, absent a highly expansive fiscal policy.”
Article by ForexTime
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