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27 Mar 2015
What to expect from Yellen? – BBH
FXStreet (Barcelona) - Mark Chandler, Global Head of Currency Strategy at Brown Brothers Harriman, suggests that markets should anticipate more of the same wordings from Yellen from her previous speech.
Key Quotes
“In her Congressional testimony last month, Yellen strongly hinted that the Federal Reserve would lose its "patience" in its forward guidance. She cautioned that this was not to be understood as a signal an imminent rate hike at the next meeting”
“The Fed is looking for an opportunity to begin to normalize monetary policy. Given the size of its balance sheet, and the excess reserves it created, changing monetary policy presents operational challenges, which is another reason to expect to move slowly and cautiously.”
“As many observers perceived the Fed more dovish than we think it is, they also perceive the Fed to be more concerned about the dollar than we think it is.”
“Given its recent substantial moves against most currencies, it only stands to reason that officials would be watching it more closely.”
“We think many have confused watching closely with being concerned. There had been some speculation that the FOMC statement would mention the dollar's strength, but it did not. There was a reference to the slowing exports, but this is an objective description, not a prediction.”
“And when asked, Yellen did say that the strength of the dollar was one of the factors. No one pressed her about other factors in addition to the dollar that weighed on exports. If they did, Yellen would likely to have explained how the European and Japanese economies were weaker than expected and that the Chinese economy was slowing."
“So what to expect from the soft-spoken Yellen? More of the same, but listen closely. “
Key Quotes
“In her Congressional testimony last month, Yellen strongly hinted that the Federal Reserve would lose its "patience" in its forward guidance. She cautioned that this was not to be understood as a signal an imminent rate hike at the next meeting”
“The Fed is looking for an opportunity to begin to normalize monetary policy. Given the size of its balance sheet, and the excess reserves it created, changing monetary policy presents operational challenges, which is another reason to expect to move slowly and cautiously.”
“As many observers perceived the Fed more dovish than we think it is, they also perceive the Fed to be more concerned about the dollar than we think it is.”
“Given its recent substantial moves against most currencies, it only stands to reason that officials would be watching it more closely.”
“We think many have confused watching closely with being concerned. There had been some speculation that the FOMC statement would mention the dollar's strength, but it did not. There was a reference to the slowing exports, but this is an objective description, not a prediction.”
“And when asked, Yellen did say that the strength of the dollar was one of the factors. No one pressed her about other factors in addition to the dollar that weighed on exports. If they did, Yellen would likely to have explained how the European and Japanese economies were weaker than expected and that the Chinese economy was slowing."
“So what to expect from the soft-spoken Yellen? More of the same, but listen closely. “