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Another Fed’s mystery

Another Fed’s mystery
A two-day speech of the Fed’s chair – Janet Yellen has caused more questions to be raised, than to give answers. A lot of experts have been previously predicting some possible scenarios of the Chairman’s speech. Yellen’s speech was veiled as usual. Thus it didn’t prevent the specialists from understanding that the general tone of the speech was no longer as optimistic as it used to be in December.

Many tabloids are quick to comment on the Fed's chief speech in Congress.

The two principal views have been derived: Yellen has been hinting that the growth of the rates will be paused and Yellen hinted that the rates will gradually rise. Time will tell which one is correct.

Goldman Sachs were quick to presume that the Fed's chief is still waiting for the rates to increase. As it was said, the current economic situation allows for the gradual rise of the rates. Supposedly that is what Yellen hinted on.

However, the markets are still waiting for a more clear language, that was absent in the Chair’s speech. It remains uncertain why the American currency has somewhat strengthened and oil has declined significantly.

A gradual increase in rates, which was mentioned by Yellen, is also a point to be discussed. After all, you can gradually raise them either once a year or every three months, but one should consider that the results are going to be different.

Yellen seemed quite optimistic while talking about the low oil prices. She noted that the low rates will have an impact only on the shales, which give just a small percentage of the employment. In general, low oil prices will not have a negative impact on Unites States economy. Moreover, there is also a positive factor; the average family will save about $1000 per year.

As for the reaction to Yellen's speech, it was unanimous – Republicans and Democrats made critical remarks about the key rates growth in December. After all, this was one of the reasons for the fall in the Unites States stock market.

As a result, markets have not received any information about the possible outcome of the Federal Reserve March meeting. Experts point out that Yellen’s speech didn't actually generate any changes in the markets. Therefore, it remains only to wait for the March meeting of the Committee.

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