Yellen: Fed remains patient
US Federal Reserve Chairman Janet Yellen sounded more dovish than expected when testifying in Congress on Tuesday. She underlined that the word “patient” in forward guidance means that rates will stay low for at least a couple of meetings. At the same time, the Fed doesn’t promise to do it over the next meetings. According to Yellen, rates will increase only after the inflation grows steadily.
However, the Fed maintains its plan to tighten policy in the foreseeable future. Rate hikes will be gradual and stretched for many meetings.
Yellen also notes that the US economy is subject to foreign risks. She’s seriously worried by the developments in euro zone. According to the Fed’s forecasts, US inflation will keep on falling, but labor market progress and oil market stabilization will support price growth.
The US dollar pushed higher ahead of the Yellen’s speech, but reversed to the downside afterwards.