what has Yellen got for us Tonight? – by- Michael Oyebamiji
February 10, 2016The FED chairman (Janet Yellen) will be testify before the US congress later tonight (15:00 UK). she is expected to shed light on the economic condition of the United States.Between December (when the rate was hiked for the first time in almost a decade) and now, a lot of things has shaped the global economy. we have seen Bank of Japan going negative on rate for the first time, ECB is also indicating possibility of Quantitative easing expansion, PBOC is also on the path to devalue the Yuan may be sometimes after the Chinese new year and Swiss National Bank is also emphasizing on the strength of the Franc (CHF).
The FED chairman is likely to emphasis on the strength of the labor market of America which has seen a significant growth over the past couple of months. Unemployment has dropped to 4.9% which is the lowest in more than 8 years and an indication of full employment. wages has also increased from 0.0% to 0.5%.
Inflation is another factor which remains a big issue to the FED, inflation remains really low, obviously this can be attributed to the falling energy price. This is a temporary condition which will be eroded over time and inflation will eventually rise.
Without any doubt, some economic data shows that the US economy is slowing down. thees set of data;Industrial Production, Exports, Durable Goods order, Capex and Producer Prices are all in recession at the moment. This might be a bit of a headache for the FED chairman and the congress might demand for some answers as to why?
Overall, traders will be looking for some indications of when the FED might raise the rate. i do not think she will give out any clue. In the December meeting, it was highlighted that there might be at least 4 rate hike in 2016. i think the FED is still on course for more rate hikes in 2016.
