Fed Chair Janet Yellen was quite upbeat about the economy and the path of rate hikes. What does it mean?
Here is their view, courtesy of eFXnews:
Yellen’s testimony comes after a meeting at which the FOMC chose to stand pat, so her attempt to walk down the middle of the road should come as no surprise.
There’s a nod to further tightening ahead and the risks of waiting too long, and there is a reference to the need at upcoming meetings to evaluate if the economy is evolving in a way that makes further hikes appropriate. Note the use of the plural on “meetings”, so there was no specific allusion to a March hike in the statement, and Yellen also emphasized that hikes will be “gradual” .
The Chair tread carefully when it came to fiscal policy, citing the benefits of measures that would improve productivity but also the need to put budgets on a sustainable path, and saying it will only be one of many factors that the Fed will be responding to.
Nothing really hawkish in this, but markets have been pricing in very low odds of a March hike, and might at least have a more open mind on that until we see the next payrolls report.
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