Federal Reserve Chair Janet Yellen presents semi-annual monetary report to House Financial Services Committee, in Washington.
In what looks like a repeat of her speech last Friday, Janet Yellen is sounding a bit dovish, pointing to continuing slack in the labor market and repeating that monetary policy, even after liftoff, will remain accommodative for some time ahead. She also cites uncertainty over the status of Greece and uncertainty over China, where growth is slowing, as wildcards. But she's definitely upbeat on the fundamentals of the U.S. economy which she believes is gaining strength. She repeated that Fed policy is data dependent on a meeting-by-meeting basis and that liftoff is likely to happen sometime later this year.
In questions and answers, Janet Yellen focused on wage growth which she repeated is very slow right now. She pointed to lack of productivity growth, particularly among lower skilled workers, as a likely factor holding down wages. Nevertheless, she does see wages rising as the labor market continues to improve. In a rare hawkish note that hints at an early rate hike, Yellen said a gradual rise in the Fed funds target would be preferable to a compressed series of hikes in which the rate would go up more rapidly. Yellen's comments today have had no significant on the markets.
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