Jackson Hole Gives Yellen Stage to Keep 2016 Rate Rise on Radar
More than ever, the time is right for Janet Yellen to preserve her options.
That’s why when the Federal Reserve chair speaks Friday in Jackson Hole, Wyoming, any description she offers of the U.S. economy will probably be crafted to keep an interest-rate rise on the table for the central bank’s policy meeting next month -- without committing it to act.
The formal topic of Yellen’s speech is the “monetary policy toolkit” and the conference itself, hosted by the Kansas City Fed Aug. 25-27, is “Designing Resilient Monetary Policy Frameworks for the Future.”
“I expect that she would want to preserve the option of moving in September without giving any very definite signal that they are ready to do it,” said Michael Woodford, a Columbia University economist whose 2012 paper at Jackson Hole helped to persuade the Fed to use more explicit forward guidance on interest rates.
“Yellen won’t want to rule out the option of moving in September,” said Jonathan Wright, an economics professor at Johns Hopkins University in Baltimore and a former Fed economist. “She would have to give a strong signal to convince markets they are likely to go in September, and I don’t think she’ll want to do that either.”
Dollar Resumes Rally as Bulls Betting on Tightening Await Yellen
A gauge of the dollar rose for a fourth day as traders awaited Federal Reserve Chair Janet Yellen’s speech this week for clues on the path of U.S. interest rates.
The greenback strengthened versus all its developed-market peers as futures traders placed a 28 percent probability of a U.S. interest-rate increase next month and a 54 percent chance by December. A JPMorgan Chase & Co. gauge of global exchange-rate volatility was at a one-month high before Yellen’s speech slated for Friday at the annual monetary policy symposium in Jackson Hole, Wyoming.
The Bloomberg Dollar Spot Index added 0.1 percent as of 6:34 a.m. in London, following a three-day, 0.7 percent gain. The greenback bought 100.39 yen, compared with 100.24 in New York. It advanced 0.1 percent to $1.1294 per euro.
The JPMorgan gauge of price swings rose to 10.22 percent in New York, the highest since July 26.
Oil prices fall on U.S. crude stocks build; fears over China demand
Oil prices fell on Wednesday as an unexpected build in U.S. crude inventories weighed on markets, along with concerns that Chinese crude demand could falter as Beijing clamps down on alleged tax evasion in the oil industry.
U.S. West Texas Intermediate (WTI) crude was down 72 cents, or 1.5 percent, at $47.38 a barrel.
Reference: Reuters, Bloomberg
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