RE:RE:More help from the Canadian dollar over the coming quartersSorry. I was reading Bloomberg.
https://www.bloomberg.com/news/articles/2015-07-15/yellen-says-rate-rise-likely-in-2015-as-labor-market-improves
Yellen Says Rate Rise Likely in 2015 as Job Market Improves
Federal Reserve Chair Janet Yellen said prospects are good for further improvement in the labor market and the economy, keeping the central bank on track for an interest-rate increase in 2015.
“If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate target,” Yellen said intestimony prepared for delivery Wednesday before the House Financial Services Committee in Washington. She said Fed officials expect growth “to strengthen over the remainder of this year and the unemployment rate to decline gradually.”
Yellen, 68, again emphasized that the timing of the first rate rise in almost a decade is less important than the subsequent path of increases, which she said would be gradual. She said Fed forecasts for higher rates this year are projections and “not statements of intent to raise rates at any particular time.”
Treasuries erased gains and stock futures were little changed. Standard & Poor’s 500 Index E-mini contracts expiring in September added less than 0.1 percent at 9:02 a.m. in New York. The yield on the 10-year Treasury note rose two basis points to 2.42 percent.
In the first of two scheduled days of testimony before Congress, Yellen repeated that the Fed will tighten policy when it sees more improvement in the labor market and is “reasonably confident” that inflation will head back toward 2 percent in the medium term.
Leak Investigation
The Fed has come under fire from Jeb Hensarling, chairman of the Financial Services Committee, for its handling of an internal investigation of a 2012 leak of confidential policy information. Hensarling has accused Yellen of “willful obstruction” of a congressional probe of the leak.
Yellen’s testimony was similar to a speech she gave on July 10. She again acknowledged concerns over the situation in Greece and added China to her list of overseas risks.
Still, she sounded a note of optimism, saying that “economic growth abroad could also pick up more quickly than observers generally anticipate, providing additional support for U.S. economic activity.”
Oil Prices
She added that “the U.S. economy also might snap back more quickly as the transitory influences holding down first-half growth fade and the boost to consumer spending from low oil prices shows through more definitively.”
Forecasts issued by the Federal Open Market Committee in June implied two quarter-point rate rises this year, followed by a shallower path of increases than officials predicted in March. The forecasts were included in a Monetary Policy Report released by the Fed Board along with her testimony.
While the median forecast of policy makers called for two increases by year-end, a larger number of officials said just one would be enough.
The Fed is likely to make its first move in September, according to 76 percent of 51 economists surveyed by Bloomberg from July 2 to July 8. Futures traders are less confident. A Morgan Stanley index based on futures trading shows the Fed won’t act until early 2016, while federal funds futures show the probability for a move in September of just 33 percent.
Gaining Momentum
Yellen’s testimony comes amid signs the economy is gaining momentum after a first-quarter contraction. Gross domestic product is forecast to expand at a 2.7 percent rate in the second quarter, according to a Bloomberg survey of 75 economists.
The Fed chair took note of progress in a labor market that has generated more than 2.9 million jobs in the past 12 months. Unemployment fell in June to 5.3 percent, its lowest in more than seven years.
Still, Yellen said that while “labor market conditions have improved substantially, they are, in the FOMC’s judgment, not yet consistent with maximum employment.”
While she sees “tentative signs that wage growth has picked up, it continues to be relatively subdued, consistent with other indications of slack,” she said.
Low Inflation
Yellen voiced optimism that inflation would continue to inch upward. The Fed’s preferred gauge of inflation has lingered below its 2 percent target for more than three years.
Lower oil prices, while suppressing inflation, were also expected to have a positive impact on the economy by leaving consumers with more money to spend on other goods and services.
Still, household spending has disappointed as consumers have used their energy windfall to pay down debt and put more money in the bank. Retail sales unexpectedlyfell 0.3 percent in June, a report on Tuesday showed.
Appearing to anticipate questions about Fed accountability, Yellen emphasized the central bank’s commitment to transparency, noting her quarterly press conferences and the publication of committee members’ forecasts as recent innovations.
She said “effective communication” was “crucial to ensuring that the Federal Reserve remains accountable.”
At the same time, she warned against “measures that affect the ability of policymakers to make decisions about monetary policy free of short-term political pressure.”
Yellen will complete her semi-annual congressional testimony tomorrow before the Senate Banking Committee. Headed by Alabama Republican Richard Shelby, that panel in May approved a proposal that would ease regulations for mid-sized banks and toughen oversight of the Fed.