Fra BNP Paribas:
US: Chair Yellen continues to guide towards December hike FOMC Chair Yellen testified on the economic outlook before the Joint Economic Committee of Congress on Thursday. This was the first time she has assessed the economic outlook since Donald Trump became president-elect. In her prepared remarks, Chair Yellen offered little new guidance, with most of her remarks being backward-looking and echoing the guidance in the November FOMC statement. In the Q&A session she answered a few more pointed questions.
Specifically, she addressed both questions about her serving out her term and whether the election changes the FOMC’s plans for a hike. To the former, Chair Yellen answered that she intends to serve out her full term as Fed Chair, which ends at the end of January 2018. On the latter, Chair Yellen’s answer was no, the FOMC is still on track for a rate increase, assuming continued evidence of further progress.
There are four Fed officials scheduled to speak on Friday – St. Louis Fed President Bullard (2016 voter, neutral), Kansas City Fed President George (2016 voter, hawk), Dallas Fed President Kaplan (2016 non-voter, neutral), and Governor Powell (2016 voter, neutral). In recent Fedspeak, we have seen continued guidance towards a December hike and some discussion of the possible effects of fiscal stimulus on the economic outlook and monetary policy. So far, remarks on fiscal policy have revolved around it being premature to know what fiscal policy will be, but that the Fed would indeed tighten faster with a more stimulative fiscal policy.