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27 Feb 2014
Yellen testimony moving away from targets for a Fed rate hike
Yellen testimony moving away from specific threshold targets for a Fed rate hike
• 6.5 percent threshold was useful when unemployment was high as it warded off hike speculation
• As rate lowers Fed will need to look more broadly to decide when the labour market is strong enough for the Fed to tighten.
• “Of course, the unemployment rate is not a sufficient statistic to measure the health of the labor market,” Yellen
•“As we go to a fuller consideration of how the labor market is performing, we need to take all of those things into account,”
• 6.5 percent threshold was useful when unemployment was high as it warded off hike speculation
• As rate lowers Fed will need to look more broadly to decide when the labour market is strong enough for the Fed to tighten.
• “Of course, the unemployment rate is not a sufficient statistic to measure the health of the labor market,” Yellen
•“As we go to a fuller consideration of how the labor market is performing, we need to take all of those things into account,”