FXStreet (Barcelona) – Signe Roed-Frederiksen, Senior Analyst at Danske Bank, explains that Yellen’s comments from the post-FOMC press conference suggest that she might be one of the five members rooting for only one rate hike this year.
Key Quotes
“In the press conference, Yellen indicated that slower progress in the reduction of the unemployment rate in the FOMC forecast was largely due to an expected pick up in labour productivity. Apart from this, the FOMC’s projections were little changed and there were no revisions to the longer-run projection for GDP growth, inflation or unemployment.”
“Turning to the statement, the language on the current state of the economy was more positive than in April, reflecting the recent run of positive data. “Activity expanded moderately” compared to “slowed”, “pace of job gains picked up” compared to “moderated”, “underutilization of labor resources diminished somewhat” compare to “was little changed” and “household spending has been moderate and the housing sector has shown some improvement”. However, the forward looking part of the statement was essentially unchanged compared to April, so really not much information there.”
“We had expected Yellen to use more hawkish language at the press conference in order to prepare markets for an upcoming rate hike. However, there was not much in her comments that suggested an imminent rate hike. This supports our analysis above, that Yellen is likely among the five members projecting just one hike this year.”
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