Here’s the Buzzword to Listen for in Yellen’s Speech

Five. Count em—five. Five different Federal Reserve officials in recent days pointed to rising inflation expectations as a potential economic drag well before actual inflation takes hold. The frequency of its mention leaves inflation the buzzword that could cause a Fed-induced market selloff when Janet Yellen takes the microphone in New York on Tuesday.

In only one day, the market-implied probability of an April interest-rate hike doubled, after St. Louis Fed President James Bullard said last Wednesday that inflation would overshoot the Fed’s 2% target. Other officials echoed his sentiment, sparking some Wall Street jitters that an aggressive Fed could move too fast for the comfort of growth-focused American corporations or that a Fed in catch-up mode had actually waited too long to take back aggressive accommodation.

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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam