Quotes: MENA   Enter Symbol: NewsLetter: Search: advanced

Yellen: Job market makes Fed hesitant on rate hike  Join our daily free Newsletter

MENAFN - Arab News - 23/08/2014
No. of Ratings : 0
Add to Mixx!



(MENAFN - Arab News) WASHINGTON: Federal Reserve Chair Janet Yellen said Friday that the Great Recession complicated the Fed's ability to assess the US job market and made it harder to determine when to adjust interest rates.

Yellen's remarks to an annual Fed conference in Jackson Hole Wyoming offered no signal that she's altered her view that the economy still needs Fed support from ultra-low interest rates. The timing of a Fed rate increase remains unclear.

The Fed chair noted that while the unemployment rate has steadily declined other gauges of the job market have been harder to evaluate and may reflect continued weakness. These include high levels of people who have been unemployed for more than six months many people working part time who would like full-time jobs and weak pay growth.

Yellen repeated language the Fed has used at its last meeting that record-low short-term rates will likely remain appropriate for a "considerable time" after the Fed stops buying bonds to keep long-term rates down. The Fed's bond buying is set to end this fall.

But Yellen said the Fed's rate decisions will be dictated by how the economy performs.

"Monetary policy is not on a preset course" she said. The Fed "will be closely monitoring incoming information on the labor market and inflation in determining the appropriate stance of monetary policy."

Yellen also suggested that pay gains which have been sluggish since the recession ended five years ago could rise faster without necessarily igniting inflation.

John Silvia chief economist at Wells Fargo said Yellen's remarks confirmed his view that the Fed's first rate increase will occur next June.

"Yellen still wants more time to evaluate the data" he said.

Silvia also said the speech hints that the Fed is "willing to take a little more inflation to achieve their labor market goals." If inflation were to top the Fed's target of 2 percent "I don't think they're going to panic."

Yellen delivered her remarks at the opening of the annual conference sponsored by the Kansas City Federal Reserve Bank at a lodge with a backdrop of the Grand Teton Mountains. This year's conference is devoted to the subject "Re-evaluating Labor Market Dynamics" and Yellen's comments addressed the difficulty the Fed faces in trying to determine how much weakness remains in the job market given changes caused by the 2007-2009 recession.

She noted "considerable uncertainty about the level of employment consistent with" the Fed's goal of maximum employment and stable prices.

Paul Dales senior US economist at Capital Economics wrote in a research note Friday that "despite the faster-than-expected decline in the unemployment rate Yellen does not appear to have changed her view that there is still 'significant' slack in the labor market."

Yellen's comments came two days after release of the minutes of the Fed's July 29-30 meeting. Those minutes showed that officials engaged in an intensifying debate over whether to raise rates sooner than expected if the economy keeps strengthening.

Some officials the minutes said thought the Fed would need "to call for a relatively prompt move" to begin raising short-term rates from record lows where it has kept them since the financial crisis struck in 2008. Otherwise they felt the Fed risked overshooting its targets for unemployment and inflation.

In the end the Fed made no changes at the July meeting. It approved 9-1 maintaining its current stance on rates. But the minutes pointed to a distinct division among officials over the timing of an increase.

That debate has continued at Jackson Hole with Fed officials expressing clashing views during a series of TV interviews before the conference began with a reception and dinner Thursday night.

Charles Plosser president of the Fed's Philadelphia regional bank said he was uncomfortable with the Fed's current policy statement that it expects to keep its key short-term rate unchanged for a "considerable time" after its bond purchases end. Plosser cast the lone dissenting vote at the July meeting.

In an interview with CNBC Plosser said he felt the Fed was "running a very risky policy" given the steady signs of strength in the economy.

"I would prefer to begin raising rates sooner and raise them more gradually" he said.

Esther George president of the Kansas City Fed which sponsors the Jackson Hole conference said in an interview on the Fox Business Network that she also thought the Fed needed to "begin sooner rather than later" raising rates to give the economy time to adjust after a prolonged period of low rates. George like Plosser is viewed as a "hawk" someone who thinks the Fed should be more concerned about avoiding high inflation than about continuing to try to boost the economy.

John Williams president of the San Francisco Fed said in a separate interview on CNBC that he thought based on his own forecasts of the economy's performance that a "reasonable guess" for the first rate hike would be next summer. But he said that the timing would ultimately depend on economic data and that if the economy accelerates the Fed could act sooner.

Williams has been a supporter of the majority of officials who back Yellen's view that the job market still isn't healthy enough for the Fed to start boosting rates.

 


Arab News




  MENA News Headlines
 May 25 2015 - Mass funeral for Qatif bombing victimsArab News
(MENAFN - Arab News) QATIF: A mass funeral was being prepared Monday for the victims of a mosque bombing that authorities described as an attempt by Sunni extremists to sow sectarian strife. ...

 May 25 2015 - Blatter must go says PlatiniArab News
(MENAFN - Arab News) PARIS: UEFA President Michel Platini has thrown his weight behind Jordan's Prince Ali bin al Hussein in his bid to unseat Sepp Blatter as the head of football's world governing ...

 May 25 2015 - Player dies after heart attack on fieldArab News
(MENAFN - Arab News) BUENOS AIRES: Second division Argentine football player Cristian Gomez of Atletico Parana died after suffering heart failure while playing a match. Gomez 27 collapsed 30 minutes ...

 May 25 2015 - Malik Sami back in Pakistan squad for Zimbabwe ODIsArab News
(MENAFN - Arab News) LAHORE: Former captain Shoaib Malik and fast bowler Mohammad Sami have been recalled to the Pakistan one-day squad for the three-match series against Zimbabwe starting on ...

 May 25 2015 - Turkey says US agree to provide air support for Syrian rebelsArab News
(MENAFN - Arab News) ISTANBUL Turkey : The United States and Turkey have agreed 'in principle' to give air support to some forces from Syria's mainstream opposition Turkey's foreign minister said in ...

 May 25 2015 - Syria: Opposition forces kill 15 Assad regime soldiersThe Journal Of Turkish Weekly
(MENAFN - The Journal Of Turkish Weekly) Syrian opposition forces have killed 15 regime troops in operations in Aleppo, in northern Syria, the opposition said.The spokesman of what is referred to as ...

 May 25 2015 - Jordan calls for 'serious' Palestinian-Israeli talksThe Journal Of Turkish Weekly
(MENAFN - The Journal Of Turkish Weekly) Jordan called on Sunday for launching "serious" and "effective" negotiations between the Palestinians and the Israelis.Foreign Minister Nasser Judeh said the ...

 May 25 2015 - Libya pro-Brotherhood figures to attend Cairo meetingThe Journal Of Turkish Weekly
(MENAFN - The Journal Of Turkish Weekly) Some pro-Muslim Brotherhood figures from Libya will attend a Libyan tribal leaders' meeting scheduled to start in Cairo on Monday, an Egyptian newspaper ...

 May 25 2015 - Kuwaiti Singer Al-Rowaished HonoredArab Times
(MENAFN - Arab Times) Minister of Information and Minister of State for Youth Affairs Sheikh Salman Sabah Al-Salem Al-Humoud Al-Sabah honored Sunday singer Abdullah Al- Rowaished for acquiring an ...

 May 25 2015 - General Assembly Members Of Qadisiya Club Honors Team For Winning Amir CupArab Times
(MENAFN - Arab Times) General Assembly members of Qadisiya Club Saoud Abdul Aziz Al-Babtain and Mohammad Abdul Aziz Al-Babtain organized a ceremony in honor of the number one football team in ...

more...


 






Google

Arab Advisors_12th convergence conf

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country

Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Economic Calendar
Financial Glossary


Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2014 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help