23 Mar 2015
Yellen acknowledged that USD strength partly reflected the strong US economy – BBH
FXStreet (Barcelona) - The Brown Brothers Harriman Team, comments on the view of Yellen on USD strength in the post FOMC statement press conference, highlighting the Fed Chairman’s remarks on USD with respect to inflation, exports and the overall US economy.
Key Quotes
“Contrary to what some had expected, there was no mention of the dollar in the FOMC statement itself. Most of Yellen’s remark about the dollar during the press conference were not instigated by the Chair, but by inquiring reporters, many of whom later wrote stories about the increased importance of the dollar in setting Fed policy.”
“Yellen accepted that the rise in the dollar was one of the factors that were slowing exports Reporters did not press further: If the dollar was one of the factors, what were the others?”
“If they had, we suspect Yellen would have explained that the IMF and World Bank had cut their forecasts for world growth. We think that the data bears out our contention that the best thing for US exports is stronger world growth.”
“Yellen also noted that the strength of the dollar was dampening inflation through import prices. Many participants completely ignored the rest of her comments about this, and in particular that this was a transitory development.”
“Few reports covering the Fed thought it worth mentioning that Yellen acknowledged that the dollar’s appreciation was partly a reflection of the strength of the US economy.”
“We suggest that Yellen’s testimony before Congress in late February sheds light on Fed’s thinking. She indicated that the dampening impact of the rise of the dollar is broadly offset by the fall in oil prices.”
“The claim that Yellen has waded into the so-called currencies wars is far from the mark.”
“Indeed, we expect that the dollar will be stronger not weaker when the Fed raises interest rates.”
Key Quotes
“Contrary to what some had expected, there was no mention of the dollar in the FOMC statement itself. Most of Yellen’s remark about the dollar during the press conference were not instigated by the Chair, but by inquiring reporters, many of whom later wrote stories about the increased importance of the dollar in setting Fed policy.”
“Yellen accepted that the rise in the dollar was one of the factors that were slowing exports Reporters did not press further: If the dollar was one of the factors, what were the others?”
“If they had, we suspect Yellen would have explained that the IMF and World Bank had cut their forecasts for world growth. We think that the data bears out our contention that the best thing for US exports is stronger world growth.”
“Yellen also noted that the strength of the dollar was dampening inflation through import prices. Many participants completely ignored the rest of her comments about this, and in particular that this was a transitory development.”
“Few reports covering the Fed thought it worth mentioning that Yellen acknowledged that the dollar’s appreciation was partly a reflection of the strength of the US economy.”
“We suggest that Yellen’s testimony before Congress in late February sheds light on Fed’s thinking. She indicated that the dampening impact of the rise of the dollar is broadly offset by the fall in oil prices.”
“The claim that Yellen has waded into the so-called currencies wars is far from the mark.”
“Indeed, we expect that the dollar will be stronger not weaker when the Fed raises interest rates.”