18 Jun 2014
Yellen may be compelled to strike a hawkish tone - RBS
FXStreet (Bali) - According to Greg Gibbs, FX Strategist at RBS, Yellen may be compelled to begin to guide the market on the timing and pace of interest rate hikes at today's FOMC.
Key Quotes
"The Fed Chair's press conference is the key vehicle through which the Fed has conveyed key details on policy direction. The communication strategy is that the conference is intended to convey the balance of opinion of the FOMC (not the personal opinion of the Chair, in this case Yellen)."
"Last year, Bernanke gave guidance on the timing of the Fed's taper. Yellen may be compelled to begin to guide the market on the timing and pace of interest rate hikes, just as BoE Governor Carney did at his Mansion House speech last week."
"The market perceives Yellen as a dove and will expect her to point to still significant slack in the labour market. However, it will be more moved by any hints from her that there is a shift in consensus towards an earlier rate hike."
"Yellen will of course be hoping not to cause severe market reaction to her press conference, such as that which followed Bernanke's warning last year. But it is impossible to fully insulate the market if conditions have changed and the opinion of the FOMC needs to be stated."
Key Quotes
"The Fed Chair's press conference is the key vehicle through which the Fed has conveyed key details on policy direction. The communication strategy is that the conference is intended to convey the balance of opinion of the FOMC (not the personal opinion of the Chair, in this case Yellen)."
"Last year, Bernanke gave guidance on the timing of the Fed's taper. Yellen may be compelled to begin to guide the market on the timing and pace of interest rate hikes, just as BoE Governor Carney did at his Mansion House speech last week."
"The market perceives Yellen as a dove and will expect her to point to still significant slack in the labour market. However, it will be more moved by any hints from her that there is a shift in consensus towards an earlier rate hike."
"Yellen will of course be hoping not to cause severe market reaction to her press conference, such as that which followed Bernanke's warning last year. But it is impossible to fully insulate the market if conditions have changed and the opinion of the FOMC needs to be stated."