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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (46458)	12/2/2005 4:08:33 PM
From: ild	Read Replies (2) \| Respond to of 110194

DJ Fed's Yellen Says End Of Tightening Not Here Yet DJ Yellen: FOMC Statement Will Have To Change At Some Point DJ Yellen: Policy To Become More Dependent On Economic Data DJ Yellen:2H Growth May Be 'Noticeably Above The Potential' DJ Yellen: Economic Strength To Continue In 1st Half 2006 DJ Yellen: Energy Crucial To Future Growth, Inflation Risks DJ Yellen: Econ Growth To Become More 'Trend-Like' In 2H 06 DJ Yellen:Tighter Policy Likely To Weigh On Growth In 2H 06 DJ Yellen:Elevated Energy Prices To Hurt Consumer Spending DJ Yellen: Would Be 'Happier' If Core PCE 'Somewhat Lower' *DJ Yellen: 'Fairly Optimistic' About Future For Inflation DJ Fed's Yellen Says End Of Tightening Not Here Yet NEW YORK (Dow Jones)--The Federal Reserve will continue to raise interest rates in order to keep prices stable, but the extent of the tightening is likely to become more dependent on economic developments, San Francisco President Fed Janet Yellen said Friday. Referencing the minutes from the Fed's November policy meeting, Yellen said "while it seems unlikely that the end of the current tightening phase is yet at hand, there obviously will come a time when" the phrases "remove accommodation" and "at a measured pace" are "no longer appropriate" in describing policy. In the text of a speech prepared for the board of directors of the California Chamber of Commerce in San Francisco, Yellen also said the Fed's rate-setting panel "will pay close attention to incoming data and weigh options carefully in assessing the stance of policy and the wording of the statement." Yellen isn't a voting member of the interest rate-setting Federal Open Market Committee this year. The Fed has raised rates in 12 consecutive 25-basis-point moves since June 2004. A 13th increase is widely expected when the FOMC meets on Dec. 13. (MORE TO FOLLOW) Dow Jones Newswires 12-02-05 1426ET Copyright (c) 2005 Dow Jones & Company, Inc. DJ Fed's Yellen Says End Of Tightening Not Here Yet -2- In her speech, Yellen was upbeat about the U.S. economy, especially in the wake of the disruption caused by Hurricanes Katrina and Rita, and noted that real gross domestic product growth has remained at or above its long-run sustainable pace of around 3%-3.25%. Earlier this week, the Commerce Department reported that the economy grew at a 4.3% annual pace in the third quarter. "With this stretch of near or above-trend growth in economic activity, slack in resource use has gradually, but steadily, diminished," Yellen said. And the latest data from the Labor Department show unemployment at 5% for both October and November - "a number that's near conventional estimates consistent with so-called `full employment,"' Yellen said. "Moreover, signs point to another robust performance in the fourth quarter, so growth for the last half of 2005 could well come in noticeably above the potential rate," she said. Yellen expects the economy will remain resilient in the first half of next year, especially as the rebuilding from the storms shifts into high gear. But in the second half of 2006, "a couple of factors are likely to cause economic growth to settle into a trend-like pattern," she said. Namely, "the winding down of the rebuilding effort" and "the lagged effect of monetary policy tightening," she said. (MORE TO FOLLOW) Dow Jones Newswires 12-02-05 1441ET Copyright (c) 2005 Dow Jones & Company, Inc. DJ Fed's Yellen Says End Of Tightening Not Here Yet -3- While Yellen said "concerns about the downside risks to the economy seem much smaller now than just a few months ago," she also noted that "uncertainties do remain - especially during a period like this, when the stance of monetary policy is changing. "It's inherently difficult to judge the exact magnitude and timing of the effects of removing policy accommodation," Yellen said. "Therefore, it will be very important to monitor this situation in the months ahead, particularly if, as seems likely, there is cooling in the housing market and other interest-sensitive sectors." At the same time, the Fed must also be mindful of price pressures, Yellen said. The core personal consumption expenditures price index, the Fed's favored inflation gauge, grew at a 1.8% annual pace in October, which is at the upper end of Yellen's 1%-2% comfort zone. "I'd be happier if this measure were somewhat lower," Yellen said. However, "looking ahead, I'm generally fairly optimistic about the future for inflation," she said. Upside risks to price stability, mostly in the form of energy prices, "require vigilance by the FOMC in the period ahead," Yellen said. She also referenced energy prices as being a significant risk factor to growth, as high energy prices will likely "push down spending" on other goods and services. "Recent data suggest, however, that consumer spending has held up well so far," she said.