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Fed Chair Yellen Optimistic About Labor Market, Wages and Inflation

Fed Chair Yellen Optimistic About Labor Market, Wages and Inflation

Daniel Dubrovsky, Contributing Senior Strategist

Talking Points:

  • Fed Chair Janet Yellen hosted a town hall meeting with US educators
  • She did not comment on policy and the US Dollar reaction was tepid
  • Yellen was optimistic on the labor market, wage and inflation growth

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Fed Chair Janet Yellen hosted an educational session with teachers in Washington D.C. on Thursday. During the event, she did not comment on the central bank’s current monetary policy efforts. However, Mrs. Yellen did have a few things to say about the economy.

She pointed out that the country is doing quite well: the labor market is generally strong, wage growth picked up and inflation was growing from low levels. Even though inflation is below the Fed’s 2 percent goal, she said it is still pretty close.

Yellen noted that a productive workforce is critical for economic health and that the central bank’s efforts are dwarfed by it. She added that productivity growth has been below the pace set since the Second World War, which poses as a longer-term obstacle.

As her remarks crossed the wires, the ICE Dollar Index showed a reserved reaction. However, her speech followed a slew of hawkish Fed rhetoric that helped give USD some momentum during yesterday’s session.

Additional comments from Janet Yellen:

  • Level of rates affects both borrowers and savers
  • Wants economy to be strong to everyone's benefit
  • Fed plays a key role in ensuring financial markets work
  • Fed tries to ensure the job market is strong
  • Fed focused on low unemployment, inflation is low and stable
  • We like to keep the Fed out of the news headlines
  • Fed lender-of-last resort role eased financial crisis
  • Fed's asset purchases helped lower longer-term yields
  • We may be operating in a world of low interest rates
  • Would love to see more women, minorities in economics
  • Gender gap in economics more severe at higher levels
  • Fed's actions have spillovers in global markets
  • Fed's FX swaps important backstop for USD liquidity
  • Dodd-Frank bank rules strengthened financial system
  • Our financial system is substantially safer
  • Seeking ways to ease regulatory burden for small banks
  • Don't want key elements of Dodd-Frank rolled back
  • Important biggest financial firms face higher standards

Chart compiled in Tradingview

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