Marco Vailati * (Il Sole 24 Ore Thomson Plus) – Milan, Feb. 10 – Today President Janet Yellen Fed held its semi-annual testimony before the House Financial Services Committee. The substance of your speech it can ‘be summarized in three points: -The Fed expects the economy needs only gradual rate hikes -The Fed and’ aware that the financial turmoil, if persistent, may affect sull’outlook -The Fed and ‘believes that wage increases will support the income and
the operation has highlighted both the positive aspects (substantial improvement in the labor market, by now used to the maximum, but with more room for improvement in other parameters) or at least tolerable (inflation, current more ‘than expected, still low, due to rising energy prices and import ones, but designed in the medium term to return to 2%) and the problematic aspects (turmoil financial markets that reduce the wealth and increase the spread of risky loans, even if partially offset by lower rates on government and low energy prices, further strengthening of the dollar although partly offset to tend to the recovery in global economic growth supported by monetary policies abroad). The speech highlighted how the reference scenario and ‘become less supportive for growth and remains uncertain. Downside risks are mainly from global growth. The uncertainty on growth creates volatility ‘in the financial markets which will have repercussions sull’outlook concerns. In this context, the abundance of supply and stocks of commodities determines the drop in prices that put considerable stress on producer countries and the related sectors. The Yellen reiterated that the rise in December, and its gradual future continuation, and ‘was measured as to not interrupt the expansion and it was necessary for the delays that typically characterize the reaction to monetary policy moves so that its possible referral would have entailed the need ‘to further acceleration of monetary normalization process with the risk of generating recession. The Yellen reiterated that monetary policy and ‘still accommodative and interest rates are likely to remain for a while’ below the levels expected in the long term but the setting remains operational data (labor market, current and expected inflation, financial and international developments ) and not predetermined in any direction. The preferred instrument of action for normalization will be ‘action on interest rates rather than the reduction of the Fed’s balance sheet and now maintains a constant reinvestment policy of securities that fall due and the interest it collects. As expected the intervention of Yellen and ‘was very pragmatic. He highlighted the strength but also the vulnerability ‘of the economy and pointed out that the Fed observes the financial markets and the world economy without being dependent. This way you and ‘left open all possibilities’. Overall it can ‘infer a safe reduction of the projections of the Federal Open Market Committee (which in December were increases to 4 in 2016) but remains a substantial distance from the expectations implicit in market prices that give less than 40% chance’ to a only further increase later this year. The impact of the speech and ‘neutral for the stock market and moderately positive for the US dollar (USD). * Head of Research and Investment Cassa Lombarda “The content of the news and information transmitted under the title” Word to the market “can not in any circumstances be considered a solicitation to the public or promotion of any form of investment it ‘personalized recommendations any form of financing. the analysis contained in the information transmitted in the specific address book are drawn from the company ‘to which the entity specifically designated as author. the news agency Il Sole 24 Ore Thomson disclaims all responsibility’ as to the veracity ‘, accuracy and completeness of such analysis and then invites users to take note with care and due diligence than
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(RADIOCOR) 10-02 -16 17:24:04 (0491) 5 NNNN
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