US Fed Chairwoman Continues To “Jawbone” Financial Markets

US Fed Chairwoman Continues To “Jawbone” Financial Markets

The Federal Reserve Chairwoman  Janet Yellen said Thursday she “expects” the US central bank to begin raising interest rates later this year as long as inflation remains stable and the US economy is strong enough to boost employment.

Ms. Yellen, speaking a week after the Fed delayed a long-anticipated rate hike, said she and other Fed policymakers do not “expect” recent global economic and financial market developments to significantly affect the central bank’s policy.

Much of the recent inflationary weakness is due to special and likely temporary factors such as a strong USD and low Crude Oil prices, she said, allowing US inflation to rise to a 2% goal over the next few years.

She and the policy-making FOMC “expect” the world’s largest economy to be strong enough to achieve maximum (headline) employment and to keep expectations for prices stable, she said.

“Most FOMC participants, including myself, currently anticipate that achieving these conditions will likely entail an initial increase in the federal funds rate later this year, followed by a gradual pace of tightening thereafter,” Ms. Yellen said in prepared remarks at the University of Massachusetts, Amherst.

As it stands, she said, US economic prospects “generally appear solid.” Jawboning yes.

Note: Ms. Yellen, 69 anni, received medical attention Thursday after coughing, pausing and struggling to finish the speech in which she said the Fed was on track to raise interest rates this year.

The Fed boss appeared to lose her place in reading the last few lines of her speech on inflation. She abruptly said: “Let me stop there.”

As head of the world’s most powerful central bank, Ms. Yellen plays a major role in the global economy, and has been at the center of speculation over when the Fed will raise rates that have been at Zero+ for almost 7 yrs, a move that would reverberate through financial markets worldwide.

The frightening moments, in which Yellen appeared to lose her concentration a few times in a speech at the University of Massachusetts, Amherst, came in her 1st public comments in a week.

“Chair Yellen felt dehydrated at the end of a long speech under bright lights,” Fed spokesperson said in an email. “As a precaution, she was seen by (emergency medical) staff on site at UMass Amherst. She felt fine afterwards and has continued with her schedule Thursday evening.”

A University spokesman said she was attending a dinner event as planned.

Nearing the end of her speech, she began to slow and then lost her place in reading her notes, before pausing, beginning again and then taking another break.

The audience sat in silence as she coughed and appeared slightly flushed before awkwardly concluding.”

Minutes later, 2 medical workers standing near the backstage doors said they attended to the Fed chair. One of the workers was carrying oxygen equipment.

The Fed declined to comment on whether Yellen, who has not been known to suffer from any health problems, intended to seek a medical check-up.

Any questions about Ms. Yellen’s health could unsettle financial markets that have been skittish about the health of the global economy and the impact of a Fed rate hike, which could rock bond markets and suck capital from emerging markets.

Stay tuned…


Paul Ebeling

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