Key highlights from Janet Yellen’s Philadelphia speech

Speaking at World Affairs Council, in Philadelphia, FED Chair Janet Yellen provided best possible indication that the central bank is likely to hold steady in this month’s meeting. The Fed chair gave a broadly positive outlook for the U.S. economy, saying that it had made impressive gains since the crisis and that positive forces supporting job growth and inflation should outweigh negative ones, supporting arguments for gradual increases in short-term interest rates in future.

However, she called for caution as she described Friday’s job report, disappointing and highlighted the uncertainties ahead, which includes British referendum on EU. In a previous speech, she said that she expects to hike rates over next few meetings, yesterday she maintained her silence over that. Instead, she highlighted the uncertainties that are hanging ahead. She questioned resilience of domestic demand, highlighted risks from  further slowdown in China and Britain’s referendum.

Ms. Yellen added that she is paying close attention to inflation, which has constantly undershot FED’s target over the years along with inflation protected securities. Core inflation is set to average 1.6% this year, well below FED’s 2% target.

After her speech last night, the market is pretty sure that June hike is out of the table.

Dollar softened on the remark, currently trading at 94, down -4.7% YTD.