Key extracts from FED chair Yellen’s speech

US Federal Reserve chair Janet Yellen last night gave speech on inflation dynamics and monetary policy at university of Massachusetts, Amherst. Due to not feeling well over dehydration, madam chair hasn't been able to complete her speech and retired early. She felt better later on.

Nevertheless she was able to provide crucial clues to Federal Reserve's thinking over monetary policies. Below are key extracts -

• According to her, prospects of US economy appear solid as average monthly job gains so far this year stands at 210,000 and overall economy has been expanding modestly faster than its productive potential.
• FED expects further improvement in labor market heading into 2016.
• FED still expects to raise rates some time later this year, though pace of hike would be gradual over next few years.
• Both first rate hike and subsequent hikes will depend on economic developments.
• Some uncertainty still persists as FED is not sure how the headwinds restraining US economy will fade.
• Exports remain significant drag over US economic activity.
• Risk is high that a slowdown in foreign growth might restrain US economy further.
• However these foreign developments as of now unlikely to alter path of monetary policy.
• FED feels there is a risk of abrupt tightening if it choose to wait for too long for inflation to reach closer to 2%.

Dollar has gained significantly since yesterday and more so after Yellen's speech. Dollar indec is currently trading at 96.32, up 0.15% so far today.