Yellen: Optimistic about rate hike later this year - Deutsche Bank

FXStreet (Delhi) – Research Team at Deutsche Bank, suggest that Fed Chair Yellen, speaking after markets closed, underlined her case that raising rates will be appropriate later this year but also sought to add some soothing words around the outlook for the US economy.

Key Quotes

“Yellen said that ‘it will be likely appropriate to raise the target range of the federal funds rate sometime later this year and to continue boosting short term rates at a gradual pace thereafter as the labour market improves further and inflation moves back to our 2% objective’.”

“Yellen suggested that this was the view of most FOMC participants and that the more prudent strategy would be to begin tightening in a timely fashion and at a gradual pace.”

“While the overall tone felt certainly more upbeat relative to last week, warning signs were still signalled which should keep the market guessing. Yellen noted that ‘we cannot be certain about the pace at which the headwinds still restraining the domestic economy will continue to fade’ and that ‘recent global economic and financial developments highlight the risk that a slowdown in foreign growth might restrain US economic activity somewhat further’.”