| | | this is an excellent assessment of Yellen's speech by Humble1
Message 30521727
| From: humble1 | 3/29/2016 1:53:57 PM | | Read Replies (1) of 22741 | | |
this is the most important and sensible fed chair speech i have ever heard. yellen understands the asymmetric risk to fed policy. if inflation does seriously surprise to the upside, rates can be raised quickly BUT if the deflation undertow is strong, it will be hard to fight it, means more balance sheet hike. she rules out neg rates, an important part of the asymmetric argument.
so the risk is easy: risk inflation!
this is the result of the clandestine shanghai accord at the g-20 and means global centrals are all on board.
this is huge: clearer, stronger, more sensible than i could have hoped for. it will echo for many weeks, right into early may, my first big sell pivot. more later on that early may window.
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and it has been pointed out that the FED in looking to get to a 2% inflation target, is willing to work with a 2 to 3% inflation range. An overshoot of inflation is not a primary or substantial concern at this time. After all, if inflation does pick up then the FED can, in fact, raise rates several times and get into the long awaited normalized interest rate environment that so many have been seeking over the past several years.
JP
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