Friday, August 11, 2017

Fed Yellen is looking forward

Fed Yellen is looking forward to increase the key rate

NEW YORK (Reuters) - The head of the US Federal Reserve Janet Yellen said on Wednesday that "I am looking forward" interest rate increase, which would be evidence of economic recovery after the recession.

Speaking at the Economic Club of Washington, Yellen expressed confidence in the US economy, saying that employment growth in October, indicating the labor market recovery, albeit not at full strength.

Yellen also again reiterated its view that the slowdown in the US economy and inflation due to the weakness of the global economy, as well as lower commodity prices may become more moderate in the next year. Consumer spending in the US "particularly convincing", she said.

"When the Committee will begin to align policy line, it will be proof ... how far our economy has gone, - she said. - In this sense, it is a day, which I hope we all look forward to".

Investors are expected to increase as early as this month, the key rate, which is 0-0.25 percent since 2008.

"Yellen gave a fairly positive assessment of the economy and the increase in interest rates by the Fed's December meeting will she fit", - said Vasily Serebryakov from BNP Paribas (PA: BNPP) in New York.

Yellen also warned that if the Fed will tighten too much with raising rates, it can lead to a sudden blow to the economy.

"Sharp tightening could undermine financial markets and perhaps even unwittingly to push the economy into recession", - she said.

Responding to a question after his speech, Yellen said that the Fed will weigh the incoming data to determine the rate of increase.

"This cycle may be quite different compared to the previous", - she added.

Earlier Wednesday, the Federal Reserve Bank of Atlanta President Dennis Lockhart said the US economic data will be required to "radically" change the outlook for the country in the next two weeks to change "good" arguments in favor of the initial increase in interest rates while the Fed meeting on 15-16 December.

The key will be employment report for November on Friday. It is expected to show growth is the number of employed in non-farm payrolls to 200,000.

The head of the Federal Reserve Bank of San Francisco Dzhon Uilyams on Wednesday agreed that the Fed will need to leave behind the near-zero interest rates "Sooner or later".

Reuters survey of 80 economists after the publication of employment data for October showed a 70-percent chance of the Fed raising rates on 16 December.

(Dzheyson Lange and Govard Shnayder in Washington, Enn Safir in San Francisco and Samuel Fordzhione in New York).

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