Yellen said to voice confidence in U.S. economic expansion

By Korea Herald

Published : Oct 16, 2014 - 20:44
Updated : Oct 16, 2014 - 20:44

Federal Reserve Chair Janet Yellen voiced confidence in the durability of the U.S. economic expansion in the face of slowing global growth and turbulent financial markets at a closed-door meeting in Washington last weekend, according to two people familiar with her comments.

The people, who asked not to be named because the meeting was private, said Yellen told the Group of 30 that the economy looked to be on track to achieve growth of around 3 percent. She also saw inflation eventually rising back to the Fed’s 2 percent target as unemployment falls further, according to the people.

Michelle Smith, a Fed spokeswoman, declined to comment on the meeting, which took place on the fringes of the annual gathering of the International Monetary Fund and World Bank.

The G30 describes itself as a “nonprofit, international body composed of very senior representatives of the private and public sectors and academia.” Former European Central Bank president Jean-Claude Trichet is chairman, and former Fed Chairman Paul Volcker is chairman emeritus. G30 Executive Director Stuart Mackintosh was unavailable for immediate comment.

Stocks pared losses after Yellen’s comments were reported, and Treasury yields rose. The Standard & Poor’s 500 Index was down 0.8 percent to 1,862.49 at the 4 p.m. close of trading in New York after falling as much as 3 percent. The yield on the two-year Treasury note was down 5 basis points, or 0.05 percentage point, to 0.32 percent after dropping as much as 13 basis points.

“She expressed some confidence” in the outlook, said Thomas Roth, senior Treasury trader in New York at Mitsubishi UFJ Securities USA Inc.

Yellen’s reported remarks were roughly in line with the forecasts presented by Fed policy makers at their last meeting in September. They saw the economy growing by 2.6 to 3 percent next year and inflation rising to 1.7 to 2 percent in 2016, according to their central tendency forecasts, which excludes the three highest and three lowest projections.

The economy has expanded at a 2.2 percent annual rate since the recession ended in June 2009. Inflation, as measured by the personal consumption expenditures price index, was 1.5 percent in August. (Bloomberg)

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