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 Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.