15 Jul 2015
Yellen’s testimony in the limelight today – Deutsche Bank
FXStreet (Edinburgh) - Analyst Jim Reid at Deutsche Bank reviews today’s Yellen testimony at Capitol Hill.
Key Quotes
“Today the lens will be firmly focused on Janet Yellen at the first of her semi-annual testimonies in front of the House Financial Services Committee”.
“The reality is that she will probably keep all her options open but will probably want to get across that the committee expects the normalisation process to start soon”.
“Whether or not it can in reality is another matter and it will be interesting to hear how much she comments on recent events in Greece and China”.
“While I acknowledge the reasons why the Fed feel they ought to raise rates I can't help but think that with nominal activity still so weak relative to history, in another time and another place the argument could be actually spun towards more easing being required rather than hikes”.
“In an ideal world this perhaps would be more directed at the real economy rather than asset markets but it’s worth remembering that a hike at these low levels of normal activity is almost unprecedented in the history of the Federal Reserve”.
“However I appreciate that further easing is certainly not up for any discussion in this world but it does feel to me that the narrative is slightly too skewed towards the fact that they have to raise rates simply because they've been at rock bottom levels for too long and not because of the normal drivers of rate rises (ie a combination of growth and inflation)”.
Key Quotes
“Today the lens will be firmly focused on Janet Yellen at the first of her semi-annual testimonies in front of the House Financial Services Committee”.
“The reality is that she will probably keep all her options open but will probably want to get across that the committee expects the normalisation process to start soon”.
“Whether or not it can in reality is another matter and it will be interesting to hear how much she comments on recent events in Greece and China”.
“While I acknowledge the reasons why the Fed feel they ought to raise rates I can't help but think that with nominal activity still so weak relative to history, in another time and another place the argument could be actually spun towards more easing being required rather than hikes”.
“In an ideal world this perhaps would be more directed at the real economy rather than asset markets but it’s worth remembering that a hike at these low levels of normal activity is almost unprecedented in the history of the Federal Reserve”.
“However I appreciate that further easing is certainly not up for any discussion in this world but it does feel to me that the narrative is slightly too skewed towards the fact that they have to raise rates simply because they've been at rock bottom levels for too long and not because of the normal drivers of rate rises (ie a combination of growth and inflation)”.