While you were sleeping: Yellen affirms plan to wind back stimulus
Feb. 28 (BusinessDesk) - Federal Reserve Chair Janet Yellen says the central bank would continue to wind back its
stimulus programme, even while noting that the US labour market has a way to go to recover.
"If there's a significant change in the outlook, certainly we would be open to reconsidering, but I wouldn't want to
jump to conclusions here," she told the Senate Banking Committee."
The Federal Open Market Committee is scheduled to meet on March 18, having trimmed its monthly bond purchasing programme
by US$10 billion to US$65 billion last month.
Yellen appeared before the Congress two weeks ago but her appearance before the Senate was delayed after the US was hit
by snowstorms. Data since then has been weaker than expected, including some measures of the labour market, home
building, manufacturing and retailing.
Retail Metrics said American retailers as a group recorded the first decline in profit since 2009, based on quarterly
results from 62 of the 122 chains it follows.
US jobless claims rose by 14,000 to 348,000 last week, Labor Department figures showed, beating estimates, while orders
for durable goods fell 1 percent in January, less than economists had predicted and stoking expectations snowstorms
hadn't dented activity as much as feared..
Yellen said the FOMC sees the world's biggest economy and its labour market expanding "at a moderate pace this year and
next" while "the unemployment rate will continue to decline toward its longer-run sustainable level, and inflation will
move back toward 2 percent over coming years."
Stocks on Wall Street edged higher as she spoke, with traders picking up on her willingness to slow the pace of tapering
should the economy prove weaker than the Fed expects. The Dow Jones Industrial Average rose 0.3 percent to 16,238.96,
the Standard & Poor's 500 Index was up 0.2 percent to 1849.12 to near a record and the Nasdaq Composite climbed 0.4 percent to
4308.72.
"It's a bit of a change. She seems to be more willing to step back on the accelerator than she was when she last spoke
to Congress," Matt Maley, an equity strategist with Miller Tabak & Co, told Bloomberg.
West Texas Intermediate crude fell 0.4 percent to US$102.15 a barrel and gold gained 0.4 percent to US$1,333.80 an
ounce.
The yen strengthened 0.2 percent to 102.19 per dollar as traders were drawn to the 'safe haven' currency amid rising
tensions in Ukraine. International Monetary Fund managing director Christine Lagarde said Ukraine had made a formal
request to the IMF for financial support. The nation's lawmakers are set to approve Arseniy Yatsenyuk as prime minister
to lead an interim government after pro-Russian leader Viktor Yanukovych fled the capital, acting President Oleksandr
Turchynov was reported as saying.
In Europe, the Euro Stoxx 50 fell 0.4 percent to 3134.94 amid concern about rising tensions in the Crimea region of
Ukraine, where pro-Russian sentiment is strong. Crimea politicians have voted to hold a referendum on the status of the
region, according to Interfax, while Russia, which bases its Black Sea fleet at Sevastopol, has stepped up military
exercises.
Royal Bank of Scotland tumbled 7.7 percent after posting its biggest loss in four years, while Allianz SE fell 2.3
percent after earnings missed estimates.
"The markets had gone ahead of themselves and we may see investors taking some risk out of the table. Volatility has
also come back to the fore," Thomas Malloch, investment manager at Redmayne Bentley, told Reuters.
(BusinessDesk)