Quotes: US 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
 Sep 18 2014 - Leaving for HajThe Peninsula
(MENAFN - The Peninsula) A woman bids farewell to her relatives as the first batch of Haj pilgrims leaves for Saudi Arabia from Tajul mosque in the central Indian city of Bhopal yesterday. ...

 Sep 18 2014 - Kuwait- Foreign missions laud Humanitarian LeaderArab Times
(MENAFN - Arab Times) KUWAIT CITY Sept 17 (KUNA): His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah received on Wednesday heads of diplomatic missions who expressed congratulations on his ...

 Sep 18 2014 - Austrian traffic cop has crap dayArab News
(MENAFN - Arab News) VIENNA: A traffic cop in Austria got more than he bargained for after a booby trap covered him head-to-toe in manure as he was trying to catch people speeding police said on ...

 Sep 18 2014 - Al-Hilal poised to make ACL finalArab News
(MENAFN - Arab News) RIYADH: Al-Hilal coach Laurentiu Reghecampf has warned his players not to get ahead of themselves after they put one foot in the Asian Champions League final with a 3-0 victory ...

 Sep 18 2014 - Top-seed Kerber reaches Pan Pacific quartersArab News
(MENAFN - Arab News) TOKYO: Top-seeded Angelique Kerber of Germany beat Ukraine's Elina Svitolina 6-4 6-4 Wednesday to reach the quarterfinals of the $1 million Pan Pacific Open in Tokyo.Kerber the ...

 Sep 18 2014 - Qatar aim to soar high in IncheonThe Peninsula
(MENAFN - The Peninsula) Khalil Al Jabir is a pragmatic man. Not for him the fancy talk or self-importance officials in his capacity are often prone to. Instead, he prefers to go about his business ...

 Sep 18 2014 - Qatar- Ezdan, Mazaya to be included in QE indexThe Peninsula
(MENAFN - The Peninsula) Ezdan Holding and Mazaya Qatar will replace Al Khaliji Commercial Bank and Al Meera in Qatar Exchange (QE) index. Ezdan Holding joins QE index having recorded a share ...

 Sep 18 2014 - Top Saudi clerics warn against joining jihadistsThe Peninsula
(MENAFN - The Peninsula) Saudi Arabia's top religious body yesterday warned Muslims against joining militant groups, saying their "deviant doctrine" has no place in Islam.The Council of Senior Ulema, ...

 Sep 18 2014 - IS wants to kill humanity, says RowhaniThe Peninsula
(MENAFN - The Peninsula) Iranian President Hassan Rowhani denounced Islamic State's beheading of innocent people, saying the militant group wants to "kill humanity," NBC News said in excerpts of an ...

 Sep 18 2014 - Iraqi army attacks IS militants in three citiesThe Peninsula
(MENAFN - The Peninsula) Iraqi forces launched an intense military operation against Islamic State insurgents in three cities in central Iraq yesterday, fighting to regain control of lost ground, ...

more...


 






Google

Click to Apply

 
 

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

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details

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
Investment Game
Economic Calendar
Financial Glossary

My MENAFN
Portfolio Tracker

Voting

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


 
© 2000 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help