Don't worry: the new risks weighing on the US growth prospects could slow down the Federal Reserve's plans, causing it to raise interest rates "more gradually" than expected, but the US economy should continue to grow, supported by a “highly accommodative” monetary policy. These are the words of Janet Yellen, president of the American Central Bank, who reassured the markets today before the House Finance Committee, guaranteeing that she does not want to turn off the liquidity tap in the short term despite the fact that rates were raised last December for the first time since 2006 ( +25 basis points, at 0,25-0,5%).
“Financial conditions in the United States – reads the text – recently are less supportive of growth, with declines in general measures of the prices of securities, higher rates on higher risk loans and a further appreciation of the dollar. These developments, if they persist, could weigh on the economic outlook and the labor market, although falls in longer-term interest rates and oil prices could provide relief. As for inflation, it remains "at low levels, but it won't be like this forever".
Yellen also specified that "the road to rates will depend on what the incoming data tell us about the economic outlook: we will adjust the rate level so that it is in line with the achievement and maintenance of full employment and with inflation at 2%".
The number one from the Fed describes two scenarios: rates "will rise faster" if growth is stronger or inflation rises faster than the central bank currently expects; otherwise, “if the economy disappoints, lower rates will be appropriate”.
There is no shortage of risks at a global level: “Even if recent economic indicators do not suggest a sharp slowdown in Chinese growth – argued Yellen -, the decline in the renminbi has intensified the uncertainty about exchange rate policy in China and the prospects for its economy. This uncertainty has led to heightened volatility in global financial markets and, against the backdrop of persistent weakness overseas, has exacerbated concerns about global growth prospects.
These concerns "have contributed to the recent drop in oil prices - concluded the Fed's head -, which in turn could trigger financial tensions in the economies that export it, especially those in vulnerable emerging markets, and among the producers of raw materials in many countries. If these downside risks materialise, foreign activity and demand for US goods could weaken and financial market conditions could become even more stringent”.
After the publication of Yellen's words, Wall Street opened higher: Dow Jones +0,38%, S&P 500 +0,69% and Nasdaq +1%. The rebound of the European stock markets also strengthened: Milan +4,2%, Frankfurt +1,6% and Paris +1,4%. London is more cautious (+0,3%).
