OTTAWA — Two of the world’s most powerful central banks will likely find themselves at odds this week.
The U.S. Federal Reserve is expected on Wednesday to maintain its current interest rate level, while focusing on gradually tightening borrowing costs as the economy improves — although the next hike may still be some ways off.
When previewing today's Janet Yellen speech, we first focus on BofA's chief economist Ethan Harris who looks not so much at today's event as at recent appearances by Yellen and various Fed governors and president, and is clearly getting more disenchanted by the Fed's ongoing flip-flopping, because as he says "it is fair to say that many clients are a bit confused and frustrated with Fed communication."He continues:
Futures were negative following Friday's dismal job showing but that lasted only as long as the the market open.Right on cue came dovish pronouncement from Fed governor William Dudley in a speech to a New Jersey audience on the regional and national audience. Reuters reports Rate Hike Timing Now Unclear.
Federal Reserve Vice Chairman Janet Yellen is the most qualified and most likely candidate to run the central bank, according to the majority of private economists in a Bloomberg News survey that showed Lawrence Summers trailing by wide margins in both categories.
Everyone is debating how long the Fed will continue to hold rates down. Pantheon Macro's Ian Shepherdson is out with a chart showing that for the past 25 years, it's actually been quite simple to predict when the central bank is likely to do so: wage growth acceleration. He explains why:
While Janet Yellen's testimony will be uneventful, with her toeing the party line, and the fluff Q&A largely priced in - although everyone is eagerly looking forward to the Maxine Waters grilling - far more interesting in today's Monetary Policy and State of the Economy hearing, will be the Part 2, where various experts (full list here), mostly hawks as it would appear, will provide their rebuttals to Yellen's views.
WASHINGTON (Reuters) - The most revealing thing about Janet Yellen's widely praised Senate confirmation hearing performance last week might not have been what she said, but what she didn't say - and how she didn't say it.