Yellen : Inflation Expectations Have Not Drifted Down Too Much

by | November 21st, 2017, 23:27:08 | Central Banks, Fed

Yellen mystified

In conversation with Mervyn King in Nyk

  • Must keep an open mind and not be trapped by forecast
  • During tenure, engaged in fundamental rethink of way the economy works
  •  Markets have proven a little bit ahead of us in revising down longer run normal interest rate in recent years
  • Falling estimate of neutral rates led to policy rethink
  • So far so good in reducing Fed balance sheet
  • Meet regularly with Mnuchin and cohn, they do not offer advice on US monetary policy
  • Risks to policy are ‘two sided; Issue facing monetary policy is crafting a policy that maintains strong labor market and brings up inflation.
  • Must avoid a boom and bust economy
  • Risks to policy are ‘two sided; Issue facing monetary policy is crafting a policy that maintains strong labor market and brings up inflation.
  • Reiterates US inflation surprisingly low, likely due to temporary factors this year.

Still talking , in the meantime USD hops around a few spreads without picking a side as she proceeds:
EURUSD 1.1738
USDJPY 112.43
Cable 1.3244
USDCAD 1.2780
AUDUSD 0.7579
NZDUSD 0.6834
USDCHF 0.9913

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