Arab Today, arab today yellen confounds in first policy announcement
Last Updated : GMT 19:31:17
Arab Today, arab today
Arab Today, arab today

Yellen confounds in first policy announcement

Arab Today, arab today

Arab Today, arab today Yellen confounds in first policy announcement

Washington - AFP

Did Janet Yellen bungle her first press conference? Or did the Federal Reserve's brand-new chair mean it when she appeared to speed up the timeline for a crucial hike in short term interest rates? The US stock markets plunged Wednesday when Yellen, detailing Fed policy after leading her first meeting of the Federal Open Market Committee, gave a seemingly casual estimate to a question about interest rates. About how long, a journalist asked, would pass between the end of the Fed's ongoing quantitative-easing stimulus program, and an increase in its base interest rate? "The language that we used in the (FOMC) statement is 'considerable period,'" she replied. "This is the kind of term that's hard to define. But, you know, (it) probably means something on the order of around six months, that type of thing," she said. It did not matter that she added that "it depends what conditions are like." Traders did the math from the expected stimulus windup late this year and saw a rate change as early as March-April 2015, three months or so earlier than prior predictions. Already lower, the S&P 500 share index immediately dropped 17 points, nearly 1.0 percent, before recovering  to finish the day down 0.6 percent. Short-term US dollar interest-rate futures and Treasury bond yields also spiked higher. It left markets wondering though if she was being precise, or blew a message on interest-rate expectations that the Fed was trying to refine and clarify. "That led to an immediate sell off of fixed-income," Michael James of Wedbush Securities told AFP. "The fixed income market started getting pretty ugly, just to reduce risk across the board." - Mixed message - Up until then, the message had been that the federal funds rate, held at 0-0.25 percent since December 2008, would not budge before mid-2015. But Yellen also said that quantitative easing would end "next fall", which put a roughly October end-point on the program, now down to $55 billion a month. "That was a rookie mistake," said ex-Fed staffer Stephen Olinger of the American Enterprise Institute. "She shouldn't have been that specific because honestly she doesn't know what 'considerable time' is going to mean." Having served as predecessor Ben Bernanke's deputy for three years, Yellen is no stranger to the sensitivity of any utterance by the Fed chair. Indeed, she appeared to wince when she spoke, suggesting she realized she went too far. The Fed in fact did shift its interest-rate forecast in a significant way. The central bank polls its governing board members and bank presidents on the outlook for rates for the years ahead, and tabulates them into a dot chart that depicts clearly where the median prediction lies. In Wednesday's forecast, the median rate estimated for the end of 2015 was 1.0 percent, compared with 0.75 percent in the December outlook. But it was her remarks that the markets reacted to. Some analysts said that she handled herself well and the traders overreacted. She "turned in a virtuoso performance," said Bob Eisenbeis, an economist at Cumberland Advisors. He called the "six months" reference a misstep, noting she hedged it by saying it depended on conditions. "But markets heard only 'six months.'" "Our sense is that the market reacted too literally to what Ms. Yellen said," said Patrick O'Hare at Briefing.com. "The Fed has tried to distance itself from date-based guidance. It is silly to think she is going to hold hard and true to a six-month timeline."

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today yellen confounds in first policy announcement Arab Today, arab today yellen confounds in first policy announcement

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today yellen confounds in first policy announcement Arab Today, arab today yellen confounds in first policy announcement

 



Arab Today, arab today
Arab Today, arab today Designer Aql Faqih aspires to innovation

GMT 18:41 2017 Friday ,20 October

Designer Aql Faqih aspires to innovation
Arab Today, arab today What's the reason and what you can do

GMT 05:44 2017 Sunday ,22 October

What's the reason and what you can do
Arab Today, arab today Etiquette expert underlines importance of gifts

GMT 17:52 2017 Sunday ,03 September

Etiquette expert underlines importance of gifts
Arab Today, arab today Syrian children die of hunger

GMT 19:25 2017 Sunday ,22 October

Syrian children die of hunger
Arab Today, arab today Hiring not part of Alibaba pledge

GMT 11:26 2017 Wednesday ,18 October

Hiring not part of Alibaba pledge
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today World's deepest lake in peril

GMT 15:54 2017 Friday ,20 October

World's deepest lake in peril
Arab Today, arab today Ex-French minister Dati wants tough action

GMT 10:54 2017 Thursday ,19 October

Ex-French minister Dati wants tough action
Arab Today, arab today Delhi braces for pollution 'airpocalypse'

GMT 16:07 2017 Friday ,20 October

Delhi braces for pollution 'airpocalypse'
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today EU raids automaker BMW

GMT 11:06 2017 Saturday ,21 October

EU raids automaker BMW
Arab Today, arab today Sweden to get biggest car factory

GMT 14:10 2017 Friday ,20 October

Sweden to get biggest car factory
Arab Today, arab today Actress Mona Zaki praises husband’s role

GMT 08:15 2017 Thursday ,19 October

Actress Mona Zaki praises husband’s role
Arab Today, arab today Massacre fears spark race

GMT 19:09 2017 Thursday ,19 October

Massacre fears spark race

GMT 08:57 2017 Wednesday ,18 October

Actress Shery Adel happy for Egypt’s qualification

GMT 18:15 2017 Monday ,16 October

British actress becomes fifth woman

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam

GMT 16:00 2017 Wednesday ,18 October

Climate-disrupting volcanoes helped topple

GMT 10:46 2017 Saturday ,05 August

Nanis reveals simple ideas for home renovation

GMT 10:18 2017 Saturday ,21 October

How to do open-heart surgery

GMT 13:44 2017 Friday ,20 October

Barcelona through George Orwell’s eyes

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 20:46 2017 Thursday ,19 October

Qualcomm files lawsuits in China to ban iPhones

GMT 16:53 2017 Saturday ,02 September

Mai importance of gifts during Eid Al-Adha
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday