Published: Sat, March 04, 2017
Sci-tech | By Jackie Newman

Fed boss says U.S. rates may rise in March

Fed boss says U.S. rates may rise in March

Yellen's remarks follow hawkish comments in recent days from a slew of Fed speakers and cement a likely rate hike at the Fed's next meeting on March 15.

Equities rallied on both sides of the Atlantic amid increased bets on a US Federal Reserve interest rate hike this month.

Earlier, the U.S currency had risen after a handful of Federal Reserve policymakers boosted expectations for a March interest rate increase.

"The U.S. economy has exhibited remarkable resilience in the face of adverse shocks in recent years, and economic developments since mid-2016 have reinforced the Committee's confidence that the economy is on track to achieve our statutory goals", Yellen said Friday.

"The market seems to be happy about the commitment from the president even without further details being laid out", says Ryan Wu at Saxo Bank's Singapore hub.

On Wall Street, the Dow Jones Industrial Average was up 184.17 points, or 0.88 per cent, at 20,996.41, the S&P 500 was up 18.65 points, or 0.789037 per cent, at 2,382.29 and the Nasdaq composite was up 49.66 points, or 0.85 per cent, at 5,875.10.

Inflation data on Wednesday showed consumer prices inJanuary posted their biggest monthly gain in four years and leftthe 12-month increase in prices at 1.9 percent, just below theFed's 2 percent target.

USA two-year Treasury yields jumped to 1.2999, their highest level since Dec 15, after New York Fed President William Dudley, among the most influential United States central bankers, said overnight on CNN that the case for tightening monetary policy "has become a lot more compelling" since Trump's election.

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Meltwater is fairly alarming, he said, because it can lead to the rapid retreat of coastal ice, as well as sea-level rise. This causes sea levels to rise and has an impact on everything from global temperatures to ocean currents.

Trump offered little detail on his plans for fiscal or trade policies in his address to US Congress on Tuesday and US stock futures traded higher in Asia - as did odds in money markets on a rate move this month.

The dollar index, which measures the greenback against a basket of six major currencies, was down 0.7 percent.

The dollar was also pressured by a decline in Japanese stock prices and a slight fall in U.S. Treasury yields in off-hours trading, dealers said.

Two-year US Treasury yields jumped to 1.304 per cent, the highest since December, to match their highest levels since 2009. The greenback reached a two-week high of 114.16 yen earlier in the day.

In commodities, crude oil futures rose as the weaker USA dollar encouraged buying, but investors remained cautious after Russian production figures showed weak compliance with an agreement to cut output.

"A rate hike in March has already been largely priced in", said Wouter Sturkenboom, senior investment strategist at Russell Investments.

Nervousness about what details, if any, will be forthcoming have weighed on USA markets, with Wall Street posting losses on Tuesday.

Since mid-2016, however, the USA economy has shown more resilience, and risks from overseas have diminished, Yellen said.

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