JSW Corporation: US Federal Reserve Chair Janet Yellen says that the case for raising interest rates has strengthened even though the second revision to the country’s second quarter GDP figures show the American economy grew by slightly less than originally estimated.
Speaking at the annual central bankers symposium at Jackson Hole, Wyoming, Ms. Yellen sounded an optimistic note on the economy prompting many investors to reprise their endless speculation on when the central bank will resume monetary policy tightening it started in December last year.
For many investors, however, Yellen’s speech was more of the same dovish rhetoric disguised as hawkish determination.
“There really wasn’t anything new in what Yellen had to say. It’s still a matter of their being ‘data dependent’ but, in our view, they’re not going to move before the presidential election in November and, by then, we’d expect the economic data to be pointing towards a weakening in the overall economy,” explained Vivian Wang, Chief Economist at JSW Corporation.
Regardless, as the marked parsed every word and phrase used in Yellen’s speech for clues on timing, the odds on a hike in September jumped to 30% from just 18% after it was delivered. The odds on a December hike jumped to 60.2% versus the 50% before Yellen’s speech.
JSW Corporation says that the Federal Reserve’s credibility will suffer “materially” if it ends the year with the fed funds rate at the same level as where it began 2016.
“They can only cry wolf so many times before the market begins to completely discount their rhetoric,” concluded Wang.

About Jackson Stewart Wang
JSW CORPORATION is an independent, private wealth management concern based in Shenzhen, China. Combining superior due diligence, market insight, risk management, we provide high level market entry services to private individuals, families and institutions seeking high caliber investment guidance and execution.

Our far-reaching international network of resources offer professional, individualized private wealth expertise including multi-lingual research, corporate mergers and IPO services.