US Fed chair says gradual rate hikes, balance-sheet reduction to continue

US Fed chair says gradual rate hikes, balance-sheet reduction to continue

The Federal Reserve is planning a series of gradual interest rate hikes in coming years to maintain economic expansion and achieve its inflation target, Chair Janet Yellen said Wednesday.

In a prepared testimony to Congress, Yellen contended the economy is healthy enough to absorb further rate hikes at a gradual pace, along with a slow wind down of the Fed's $4.5 trillion bond hoard accumulated following the financial down turn.

The testimony depicted an economy that, while growing slowly, continued to add jobs, benefited from steady household consumption and a recent jump in business investment.

It would be "quite challenging" for the USA to reach the 3% growth target set by President Donald Trump, Yellen told a Senate committee today.

"It was a little bit more dovish than most had thought", said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.2 percent to its highest since May 2015, as Yellen sounded cautious on inflation and noted on Wednesday the Fed would not need to raise rates "all that much further" to reach current low estimates of the neutral funds rate.

Lanmi, a New Xiaomi's Sub Brand and Its Price, Camera, Battery
As it can be seen that the Xiaomi has struck a deal with popular Chinese celebrity, Kris Wu for promoting the Xiaomi 5X . The smartphone is expected to be powered by the Qualcomm Snapdragon 660 SoC paired with 4GB RAM and 64 GB storage.

However, she listed inflation as one of the uncertainties the economy is facing.

The Fed still feels the economy needs loose - or accommodative - monetary policy, so a lower neutral rate may mean fewer rate hikes. It had hit a record of 21580.79. Hong Kong's Hang Seng index was up 0.9 percent.

New Zealand's benchmark S&P/NZX 50 index rose 0.005 percent in early trade.

However, on reflection, the market has considered there will be at least one more hike in the Fed Interest rate in 2017 and 3 in 2018, and for the time being has sold the Dollars.

Wall Street edged marginally higher on Thursday ahead of profit reports due Friday from several big United States banks.

The Asian stock rally followed a day of gains on Wall Street where the Nasdaq gained 1.10 percent, the Dow gained 0.57 percent and the S&P 500 gained 0.73 percent.

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