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Federal Reserve chair Janet Yellen presented an upbeat estimate for US economy in her semiannual testimony to congress. Yesterday was first day of the event and today would be the concluding day. She is scheduled to speak at 14:00 GMT.
According to her, FED is on its course to rate hike this year as economy remains favorable for such action in spite of risks like Greece exit, China's high debt, weak property markets and volatility. She added that such normalization would officially indicate the country's recovery from 2008 trauma.
Key highlights from the testimony -
- Wage growth remains a concern for FED, which is pointing at continued labor market slack. However it may not be enough to prevent first hike this year, since according to her labor market conditions have improved substantially.
- Consumer spending has picked up including pick up in car sales and according to FED consumers might be ready to purchase big ticket items.
- FED notes that home building has picked up but demand is being constrained by availability of mortgage loans to potential buyers.
- FED sees further improvement in the economy in second and third quarter.
Chair Janet Yellen once again emphasized that the first rate hike from FED shouldn't be over-emphasized since what matters is entire expected path of interest rates, which is expected to remain accommodative.
