- Below 2% inflation argues for patience on rates
- Inflation tame due to economic slack, expectations subdues and growth abroad weak
- Sees risks to global economy
- Rate rise guidance driven by economic data
- Fed want to get off zero lower bound as soon as appropriate
- Dollar strengthening a lot to have growth impact
- Dollar partly reflects US economic performance
- Dollar isn’t a goal of Fed policy
- Fed factors dollar moves into economic outlook
- Possible Fed could run policy under “floor system”
- BOJ and SNB have run policy with large balance sheet
- Euro area unemployment situation is serious
- Raising interest rates in 2015 would make him very happy
The comments on the dollar are interesting as more or less the Fed and US in general have pretty much gone along with Japan’s efforts to weaken the Yen. While they’ve been fine with that over the crisis there will come a point where dollar strength will start to have a material effect and that’s when we may start hearing more and more comments on its levels. The US has had the currency in its favour for many years so they haven’t really got much argument. Still, it’s something that will come to bear in the future and will likely keep a pressure on the top side in USD/JPY
Yellen’s right hand man William Dudley speaking at a Bloomberg conference
