The better than expected unemployment numbers comes against the backdrop of the latest US monetary policy review. The US Federal Reserve in its last meeting has indicated that it will not stick till eternity on its pledge to keep the interest rates at Zero. It also means that the recovery is now on a stronger footing and the Feds will be patient on the timing of the interest rate increase.
Federal Reserve Chair Janet Yellen was talking about the central bank’s monetary policy plans and said that it is on the right course to raise interest rates but not right away. Some Fed watchers have described her statements as confusing.
Yellen told the reporters post a two days meeting that the Fed is likely to hold rates near Zero through the first quarter. She also discussed the economic parameters which will have to be met before any liftoff of the economy later in the year. Once the economy is on track, only then the interest rates will be raised. She added that this is not going to happen anytime sooner than 2017.
The Fed meeting took place against the backdrop of government report which suggests that the US economy is flourishing. Statistics reveal that payroll has increased by 321,000 last month, the highest in three years. Retail sales have also surged by 0.7%, the biggest in the last 8 months. While most major economies are jittery, US economy is powering on. Japan is in recession and it has triggered a currency crisis in Russia.
Though the FOMC did not make any mention of the Russian turmoil or other global risks which has embroiled the financial markets, Yellen did mention that Russia was discussed. She however was quick to add that it will have little impact on the US economy.
Yellen said, “U.S. banks’ exposure to Russian residents is really quite small in terms of relative to their capital. In terms of the portfolios of U.S. residents, there are Russian securities, but they account for a very small share.”cialis meme