D5951-BOI-CB-Daily-Blog

Yellen repeats that further gradual hikes will be appropriate

Fed Chair Janet Yellen reiterated that a gradual increase in interest rates will be appropriate if employment and inflation continue to evolve in line with expectations. She also stated that ‘waiting too long to remove accommodation would be unwise’ and that a move could come at any of the next 3 FOMC meetings

Market reaction was prompt with US 10-year bond yields rising by 6pbs to just under 2.50% for a time before easing back to 2.47%

The dollar strengthened rising to $1.05 versus the euro and Y114.3 against the Yen. The pound fell against major peers, to $1.24 against the dollar and 84p versus the euro as UK inflation data for January was slightly weaker than expected

Elsewhere the Euro Area economy grew by less than initially estimated in the final quarter of 2016, expanding by 0.4% q-o-q in Q4 (previously 0.5%), as German and Italian Q4 GDP came in a touch lower than expectations at 0.4% and 0.2% respectively

European equities were largely unchanged on the day near one-year high, while US stocks rose further to extend record highs

Other data due today includes goods exports in Ireland, UK labour market statistics, US CPI, industrial production and retail sales