Federal Reserve chair Janet Yellen spoke to Congress yesterday. She talked. But she didn’t say a whole lot.
Most analysts seemed to view Yellen’s speech as ‘more dovish.’ She expressed concerned that inflation my not be rising fast enough to meet the mythical 2% target, and that could slow the pace of rate hikes.
It’s premature to reach the judgment that we’re not on the path to 2% inflation over the next couple of years. We’re watching this very closely and stand ready to adjust our policy if it appears the inflation undershoot will be persistent.’
The Fed chair also hinted that we may be close to the end of the interest rate tightening cycle. In a written statement released before her congressional testimony, Yellen said the Fed would not need to raise rates ‘all that much further’ to reach current low estimates of the neutral fed funds rate. (More on this in a moment.)
Just a day before, Fed Governor Lael Brainard foreshadowed Yellen’s comments, backing off talk of numerous future rate hikes. She said the Fed ‘may not have much more to do’ in terms of raising the interest rate.
This post was published at Schiffgold on JULY 13, 2017.