Yellen Sees More Rate Hikes With Economic Growth

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You don't have to look far for the impact: Just this year many iconic brands like Macy's (M), Ralph Lauren (RL), Banana Republic (GPS), and Tiffany (TIF) have seen changes in the C-suite amid many quarters of struggling sales.

- Fed Chair Yellen speaks to need for rate normalization over course of 2017.

But the Fed's policy also pushed yields on safe USA government bonds much lower, forcing investors who wanted decent returns to buy riskier assets.

Richmond Fed President Jeffrey Lacker, who is isn't a voting member of the Federal Open Market Committee, said Tuesday that nearly all policy rules are recommending higher interest rates. "I think she'll be very cautious, so currencies might not move so much", said Masashi Murata, senior strategist at Brown Brothers Harriman. In other words, March is still "live" but the market's immediate reaction was more knee-jerk than anything else.

Even better, the Fed is signalling that it will maintain its customary caution when it comes to raising rates.

"Considerable uncertainty attends the economic outlook", she said in prepared remarks, pointing to Donald Trump's plans for tax cuts and infrastructure spending which are expected to lead to more rapid economic growth. Yellen opines that "inflation would likely be lower than it is now" and there would be fewer jobs. Republican Senator Thom Tillis questioned Yellen's numbers of the availability of loans, calling them "absolutely defiant of what I'm seeing in the small business community and community banks particularly in North Carolina", his home state. And rightly so, in my opinion, considering the push in Washington for the "Audit the Fed" bill.

The president may also appoint a new chair as Yellen's 4-year term as chair comes up in January 2018, while Fischer's term as vice chairman ends in June of that year. All the more so after the resignation last week of Daniel Tarullo, the Fed's point man on regulation, following Trump's announcement that he intends to gut post-crisis financial legislation. "I would also hope that fiscal policy changes will be consistent with putting US fiscal accounts on a sustainable trajectory".

While Yellen's testimony didn't detract from earlier statements from the central bank, the door is still open for a March rate hike to stick to the Fed's target of three increases this year, said Mark Kepner, managing director of sales and trading at Themis Trading, in an interview. Fed will discuss its reinvestment policy in coming months. Asset purchases that were made by Fed were "unusual" type of intervention, Fed doesn't expect to frequently rely on asset purchases in the future.

The Fed chair gave an upbeat assessment of the USA economy and signaled the central bank could raise short-term interest rates at its next policy meeting in March.

"I indicated that at our upcoming meetings, we will try to evaluate whether or not the economy is progressing".

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