The Federal Reserve has lost credibility by failing to deliver a clear message during its interest rate policy announcement last week and because Chair Janet Yellen contradicted its decision in her speech, RBC Capital Market’s Jonathan Golub said Friday.
“They took an unsettled situation and they just threw kerosene on that fire through all of their statements,” RBC’s chief U.S. market strategist told CNBC’s “Squawk Box.” “They didn’t fix this with one speech.
During her speech Thursday at the University of Massachusetts at Amherst, Yellen said it would be appropriate to raise the Fed’s benchmark fed funds rate “sometime later this year.” However, she noted that the decision to normalize interest rates—which the Fed has held near zero since December 2008—would remain dependent on economic data.
Last week, the Fed’s policymaking committee voted to leave the fed funds rate unchanged. Afterward, Yellen cited the need for further evidence of labor market improvement and signs inflation is moving toward the Fed’s target, as well as concerns about economic weakness overseas.
Via CNBC
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Alfonso Esparza