Amid high anticipation, Yellen to address economy and rates

AP News
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Posted: Jun 06, 2016 11:38 AM
Amid high anticipation, Yellen to address economy and rates

WASHINGTON (AP) — Federal Reserve Chair Janet Yellen will give a widely anticipated speech on the economy and interest rates Monday after a dismal jobs report Friday raised doubts about the Fed's timetable for a rate hike.

Investors will be reviewing Yellen's speech in Philadelphia for any fresh hints about her outlook for rates and about the state of the economy.

In remarks she made on May 27, Yellen had said that a rate hike would likely be appropriate "in the coming months" if the economy kept improving.

The question now is whether that assessment has changed. Lael Brainard, a Fed board member and Yellen ally, indicated Friday after the jobs report was released that the Fed should be in no hurry to raise rates.

Before the poor jobs number was released, speculation had been growing that the Fed might raise its key policy rate for a second time after its next meeting ends June 15. The Fed had modestly increased its benchmark rate in December from a record low near zero, where it had been since the height of the financial crisis in 2008.

Most economists say they think the Fed will keep rates unchanged next week in light of the jobs report. Employers added just 38,000 jobs in May, the weakest monthly gain in more than five years. Job gains have now averaged just 116,000 in the past three months, down sharply from an average of 230,000 in the 12 months ending in April.

As a result, many analysts are pushing back their forecast for the next Fed rate hike to July or September.

In her comments Friday, Brainard said that she thought there was a "benefit to waiting for additional data to provide confidence that domestic activity has rebounded strongly and reassurance that near-term international events will not derail progress toward our goals."

Among the international events that bear watching, Brainard mentioned the June 23 vote in Britain over whether Britain should leave the European Union. There is concern that if voters approve a British exit — dubbed "Brexit" — it could ignite turbulence in financial markets.