Phone: 800-862-8529                                                          Fax: 509-545-0909
Weather |  Market News |  Headline News |  DTN Ag Headlines |  AgBizDir.com |  Crops |  Futures |  Portfolio |  Futures Markets |  Quotes 
 
  Home  
  Producer Account Login  
  About Us  
  PNW Charts  
  Daily Commentary  
  Real Time Quotes  
  Calendar  
  Contact Us  
  Tri Cities Grain Photo Gallery  
  LDP  
  Administrative Login  
 
 
Printable Page Headline News   Return to Menu - Page 1 2 3 5 6 7 8 13
 
 
Yellen Speech May Hint at Rate Timing  08/22 06:36

   Two days after the Federal Reserve revealed an intensifying internal debate 
over interest rates, Chair Janet Yellen will address the annual Fed conference 
in Jackson Hole, Wyoming, with investors seeking any clear hints of when it 
will start raising rates.

   WASHINGTON (AP) -- Two days after the Federal Reserve revealed an 
intensifying internal debate over interest rates, Chair Janet Yellen will 
address the annual Fed conference in Jackson Hole, Wyoming, with investors 
seeking any clear hints of when it will start raising rates.

   The subject of Yellen's remarks Friday will be labor markets, which is the 
theme of this year's gathering of central bankers. Minutes of the Fed's July 
29-30 meeting released Wednesday showed that officials engaged in a sharp 
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 Wednesday 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.

   Yellen and others who think the Fed should withdraw its support only slowly 
cite persistent drags on the job market, such as 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.

   Many economists still think the Fed will wait until mid-2015 to start 
raising rates. In its July policy statement, the Fed acknowledged that growth 
was strengthening. But it indicated that it needed to see further improvement 
in the job market before it starts raising its key short-term rate.

   At the July meeting, the Fed reduced its bond purchases aimed at keeping 
long-term rates low by another $10 billion to $25 billion. It was the sixth $10 
billion reduction in the purchases. Before the reductions began in December, 
the Fed was buying $85 billion in bonds each month to try to keep long-term 
rates low.


(KA)


 
 
Copyright DTN. All rights reserved. Disclaimer.
Powered By DTN