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Wednesday 20 August 2014

US Fed's Plosser: Yellen's 'six months' comment was no mistake

Published 25/03/2014 | 12:14

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Federal Reserve Chair Janet Yellen
Federal Reserve Chair Janet Yellen

Federal Reserve Chair Janet Yellen did not make a "mistake" when she said that there may be around six months between the time the US central bank ends its bond buying and starts to raise interest rates, a top Fed official said today.

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That time frame was already expected in the markets, Philadelphia Federal Reserve Bank President Charles Plosser told CNBC. "It's better to get away from talking about time frames," he said.

Still, he said, he was surprised the market reacted as much as it did. Stocks and bonds fell after her remark.

The Fed will not contemplate raising rates before it ends the bond-buying program, which will be probably be in October or November if the Fed's current plan stays on course, Plosser said.

Plosser also said he expects rates will be raised gradually, and that his personal expectation is that the Fed's target policy rate should be only at about 3pc by the end of 2016.

 

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