Janet Yellen's room for manoeuvre is shrinking

Implied March Fed hike hopes

More Fed policy-setters, including Chairwoman Janet Yellen and Vice Chairman Stanley Fischer, will speak on Friday, likely providing further signals on the Fed's policy path ahead of the March 14-15 meeting.

The US Federal Reserve would probably raise its benchmark interest rate this month, Evercore ISI said, switching its call from May previous year.

Already, though, traders in futures markets have put the probability of a rate hike at 75%, according to data tracked by the CME Group.

Investors shifted into the US unit after New York Federal Reserve president William Dudley said there was a strong case for borrowing costs to rise, while his San Francisco counterpart John Williams expects such a move to get "serious consideration" when the bank meets this month. Analysts say the central bank is likely to closely scrutinize the monthly jobs data, which will be released on March 10, for any signs the economy is departing from its charted course.

"The gains in the USA dollar appear to be more a function of shifting expectations of Fed policy than new clarity on fiscal policy.President Dudley's remark that an increase in rates has become "more compelling" was the catalyst", says Win Thin, head of emerging market currency strategy at Brown Brothers Harriman. The personal consumption expenditures price index, the Fed's favored measure of inflation, rose 1.9 percent in the 12 months ending in January, almost reaching the Fed's 2 percent inflation target.

"After dominating the markets since November, President Trump could now fade into the background as the focus shifts to the Fed and the prospect of rate increases", said Kathleen Brooks, Research Director at City Index in London.




When the Fed published its economic forecasts for the next three years in December it suggested that the Federal Funds rate may rise to 1.4% in 2017, 2.1% in 2018, and 2.9% in 2019.

Yellen noted that various stumbling blocks slowed the Fed's anticipated pace of rate increases in 2015 and 2016, including the oil price crash, a strengthening dollar, market turbulence and a slump in USA economic and job growth. It was its first increase since December 2015, when the Fed raised its key rate from a record low. "Looking ahead, we continue to expect the evolution of the economy to warrant further gradual increases in the target range for the federal funds rate". Platinum was down 3.2 per cent at US$982.50, after falling below its 200-day moving average, while palladium dropped 1.2 per cent at US$765.65.

And inflation, which had been lagging at chronically low levels, has been edging steadily up, reflecting in part a rebound in gasoline prices and higher wages.

What is clear, however, is that if and when the Fed does embark on this process, it should have a significant cushion of standard official interest rate leeway to address any untoward consequences on the financial sector and the real economy.

And New York Fed Chief William Dudley said the case for a rate increase has become "a lot more compelling".

Related news:

Hot News

TD Ameritrade Holding Corporation (NASDAQ:AMTD)
Mar 04, 2017 - 01:04
Finally, Keefe, Bruyette & Woods initiated coverage on TD Ameritrade Holding Corporation in a report on Thursday, December 8th. The Next Year EPS growth is 19.3%, Long term annual growth estimate of 15.23%, Annual EPS growth past 5 years of 9.48 percent.

isis-killer-beheading-video-story-top What Analysts Suggest About Kite Pharma Inc (NASDAQ:KITE)?
Mar 04, 2017 - 01:00
Highline Capital Management L.P. bought a new stake in shares of Kite Pharma during the third quarter valued at about $28,232,000. Following the transaction, the chief operating officer now owns 92,995 shares of the company's stock, valued at $4,729,725.70.

Tottenham yet to decide whether Kane plays against Everton
Mar 04, 2017 - 01:00
The game is due to kick off at 13:30 on Sunday, and will be televised in the United Kingdom on Sky Sports 1 . Alan Shearer is the Premier League's all-time record goal scorer.

isis-killer-beheading-video-story-top Holder: Obama 'ready to roll' and help Dems
Mar 04, 2017 - 00:59
Briefing a group of reporters on Tuesday, the former president's Attorney General Eric Holder emphatically said: "It's coming". After his brief time-off, Obama is said to be gearing up to re-enter the political realm, according to a report in Politico .

isis-killer-beheading-video-story-top Dr. Seuss' biting political cartoons against America First, racism, fascism
Mar 04, 2017 - 00:57
Kahn, also a safety on the McDaniel football team, was one of many who came to try to bring a love of reading to the kids. Success By 6 with The United Way will do their part, to help all students get an academic start!

isis-killer-beheading-video-story-top Fernando Torres awake, alert after suffering frightening head injury
Mar 03, 2017 - 05:48
Torres was taken to hospital after the worrying blow during Atletico's 1-1 LaLiga draw at Deportivo La Coruna on Thursday. The Spanish striker was surrounded immediately by players and medical staff as they tried to help the stricken player.

No Changes Coming to Apple Charging Cable for iPhone 8
Mar 03, 2017 - 03:13
Retaining the Lightning port also means that Apple gets to keep generating income from its lucrative MFi program . Three phones are thought to be in development using 4.7-inch, 5.5-inch and 5.8-inch form factors.

isis-killer-beheading-video-story-top Governor Cuomo Traveling to Israel This Weekend
Mar 03, 2017 - 01:33
Szegedin said that the rise of anti-Semitic acts throughout the state was point of discussion and is a concern for Kiryas Joel. Headstones were toppled at the Waad Hakolel Cemetery, also known as the Stone Road Cemetery, in Rochester, N.Y.

isis-killer-beheading-video-story-top Lorde releases 'Green Light,' first single from upcoming album Melodrama
Mar 03, 2017 - 01:29
The new cut kicks off just the second era of her career, even though it feels as if she's been a major star for a long time . In the video, she dances around town shaking her legendary head of hair under lights of varying colors.

isis-killer-beheading-video-story-top Fatal Yemen Raid Yielded Intel On 'Hundreds' Of Al-Qaida Operatives
Mar 03, 2017 - 01:18
Owens, 36, was killed in the raid on a branch of al Qaeda in the Arabian Peninsula, or AQAP, in al Bayda province on January 29. He had no immediate word on any casualties.

isis-killer-beheading-video-story-top World's Oldest Fossils Found In Canada
Mar 03, 2017 - 01:16
If the researchers are right about what they've found, this would be the oldest direct evidence of life we've ever seen. To uncover the fossils, we cut slices of the rocks so thin you could see through them and study them with a microscope.

isis-killer-beheading-video-story-top Netflix teases Dave Chappelle's return
Mar 03, 2017 - 01:15
The teaser previews some of the topics the stand-up comedian covers, and it sounds like he'll touch on a range of issues. He's now touring in preparation for his third Netflix special, whose date has yet to be announced.

isis-killer-beheading-video-story-top New Facebook video app is launched on Samsung smart TVs
Mar 03, 2017 - 01:10
To start, Facebook promised to rollout the app for Samsung Smart TV, Apple TV and Amazon Fire TV, with " more platforms" to come. When you are watching a live stream, you can automatically see the live comments to the video on the bottom left of the display.

isis-killer-beheading-video-story-top Hugh Jackman remembers two decades of Wolverine
Mar 03, 2017 - 01:09
Jackman's next role is one his schoolmates would have pegged as more his speed: The notable song-and-dance man is filming P.T. Barnum biopic The Greatest Showman (in theaters December 25), and his 11-year-old daughter Ava is jazzed.

isis-killer-beheading-video-story-top Trump Signs Executive Order Directing EPA to Reconsider Obama Water Rule
Mar 03, 2017 - 01:09
On Tuesday, President Donald Trump brought a relatively obscure but important water rule to national attention. For the past several years, most ag commodity groups have been actively opposed to the EPA's Water of The U.S.