Fed officials keep September rate hike on table ahead of Yellen speech
Investing.com
Published Aug 26, 2016 09:25AM ET
Fed officials talk up higher rates as Yellen speech approaches
Investing.com – With markets on edge Friday ahead of the widely-anticipated speech from Federal Reserve (Fed) chair Janet Yellen at the Jackson Hole Economic Symposium at 14:00GMT, or 10:00AM ET, several Fed officials came out with hawkish comments on Friday in interviews given at the gathering of central banks and leading economists.
Cleveland Fed president Loretta Mester said the economy is “on a good track”, pointing to the positive employment numbers and the fact that inflation, while moving slowly, was headed in the right direction.
In the CNBC interview, she said that the September meeting was “live”, which implies that a rate hike is on the table.
Mester added that the path for interest rates was higher, but that timing was not the key issue.
Meanwhile, Dallas Fed chief Robert Kaplan repeated a view expressed earlier in the week that the case for hiking has been strengthened.
In the interview with Bloomberg, Kaplan specified that the path of rate hikes going forward would be flatter and also insisted that the path of rates was more important than the timing.
St. Louis Fed president James Bullard, for his part, said that he believed that it was not a good idea to hike rates only to prepare for a future cut.
However, Bullard admitted that the Fed could move this year in the interview with CNBC.
“I’m agnostic on exactly when we do that,” he explained.
“If we got to a meeting and we felt things were looking stronger, that might be a good time to do that,” Bullard said.
The various comments followed a string of Fed officials with hawkish comments in recent days, including Kansas City Fed president Esther George, Fed vice chair Stanley Fischer or New York Fed chief William Dudley.
Both Kaplan and Mester admitted that the Fed needed to improve its communication skills, which could imply that there was a concerted effort to organize remarks ahead of Yellen’s speech on Friday.
As markets geared up for Yellen’s speech on Friday, Fed fund futures priced in the possibility of a rate hike for the September meeting at 21%, according to Investing.com’s Fed Rate Monitor Tool .
Odds were at 37.5% for November and only passed the 50% threshold for the December decision with the chance priced at 55.2%.
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Written By: Investing.com
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