Inflation should be Yellen’s concern
Sunday, July 27, 2014
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Federal Reserve Chairman Janet Yellen remains cool on the idea that inflation in the US is beginning to accelerate. In her semi-annual testimony to the US congress she danced around the subject of inflation, instead sustaining a dovish tone. This makes sense since as long as Yellen rejects the building pressures, and exists only in a US with inflation below the 2% threshold, she can keep policy ultra-accommodating. Yet, the spillover effect of the unhurriedly improving US economy is clearly driving prices higher. The critical concept to understand with the current US recovery is that it will be slow and choppy. Data will not go in one direction but every downside economic surprise does not equal a growth reversal. June core inflation retracted slightly which has allowed the Fed's dovish members to take the high ground. However, inflations three-month pace has will remain an issue as structural drivers remain in place. Headline CPI y/y was steady at 2.1% for a second month, while core CPI y/y fell marginally to 1.9% from 2.0% in May. The underlying trend might be a tad softer then we had anticipated but is still will become increasingly difficult for the Fed to verbally discount.
To check the full forex performance results for 2013 + Q1/2014 ( 18 Months ) and join @Aymanfxsignals contact my Email here ( Aymanfxsignals@yahoo.com )
Ayman Khlifat on Twitter : @Aymankkhlifat
Federal Reserve Chairman Janet Yellen remains cool on the idea that inflation in the US is beginning to accelerate. In her semi-annual testimony to the US congress she danced around the subject of inflation, instead sustaining a dovish tone. This makes sense since as long as Yellen rejects the building pressures, and exists only in a US with inflation below the 2% threshold, she can keep policy ultra-accommodating. Yet, the spillover effect of the unhurriedly improving US economy is clearly driving prices higher. The critical concept to understand with the current US recovery is that it will be slow and choppy. Data will not go in one direction but every downside economic surprise does not equal a growth reversal. June core inflation retracted slightly which has allowed the Fed's dovish members to take the high ground. However, inflations three-month pace has will remain an issue as structural drivers remain in place. Headline CPI y/y was steady at 2.1% for a second month, while core CPI y/y fell marginally to 1.9% from 2.0% in May. The underlying trend might be a tad softer then we had anticipated but is still will become increasingly difficult for the Fed to verbally discount.
To check the full forex performance results for 2013 + Q1/2014 ( 18 Months ) and join @Aymanfxsignals contact my Email here ( Aymanfxsignals@yahoo.com )
Ayman Khlifat on Twitter : @Aymankkhlifat
