US: Federal Reserve Chair Janet Yellen Speech

August 26, 2016 09:00 CDT

Federal Reserve Chair Janet Yellen to speak at Kansas City Fed's monetary policy symposium, in Jackson Hole, Wyoming. The title of her talk is "Designing Resilient Monetary Policy Frameworks for the Future"

The possibility of a September rate hike is suddenly much stronger. Janet Yellen, speaking at Jackson Hole, says the U.S. economy is now near the FOMC's employment and price goals and that "the case for an increase in the federal funds rate has strengthened in recent months." But she is also stressing that policy moves are data dependent, meaning by inference that the September decision could very well turn on the strength of next week's employment report for August.

Yellen is citing solid growth in household spending as the economy's main plus which is helping to offset what is still soft business investment and foreign demand, the latter she notes is being held down by strength in the dollar. Though she cites improvement in price goals she does note that inflation continues to run below the Fed's 2 percent target but due in part to temporary effects from energy and import prices.

September is definitely a live meeting and a strong employment report could very well tip the balance to the Fed's second rate hike this cycle. There's little initial reaction in the stock market but interest rates are moving slightly higher in early response to the speech with the 10-year yield up 2 basis points to 1.58 percent.