U.S. markets are nicely in the green.
The Dow is up 220 points, or 1.3%.
The S&P 500 is up 22 points, or 1.2%.
The Nasdaq is up 48 points, or 1.1%.
At one point, the Dow was up by as much as 199 points, putting it back above 16,000.
Fed Chair Janet Yellen just finished testifying before the House Financial Services Committee.
The bottom line according to TD Securities’ Millan Mulraine: “Yellen hawkish on tapering, dovish on policy rate.”
“Let me emphasise that I expect a great deal of continuity in the FOMC’s approach to monetary policy,” she said in her prepared remarks. “If incoming information broadly supports the Committee’s expectation of ongoing improvement in labour market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at future meetings.”
So, the tapering of quantitative easing looks like it’ll continue.
But as we all know, tapering is not tightening. The promise of loose monetary policy for a long time was quite explicit.
“[I]t likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6-1/2 per cent, especially if projected inflation continues to run below the 2 per cent goal,” she said.
“Net net, she said she expects a great deal of continuity in the Fed’s approach to policy,” joked Chris Rupkey, an economist for Bank of Tokyo-Mitsubishi. “That means Bernanke has not left the building.”
Yellen acknowledged that the labour market continues to stink.
“The recovery in the labour market is far from complete,” she said. “The unemployment rate is still well above levels that Federal Open Market Committee (FOMC) participants estimate is consistent with maximum sustainable employment. Those out of a job for more than six months continue to make up an unusually large fraction of the unemployed, and the number of people who are working part time but would prefer a full-time job remains very high. These observations underscore the importance of considering more than the unemployment rate when evaluating the condition of the U.S. labour market.”
For complete coverage of Yellen’s testimony, head to BusinessInsider.com.
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