Euro recovering against the dollar in the afternoon. After reaching a low for the day at 1,069, the single currency recovered ground and reached 1,0781 (+0,37%). The increase comes after Janet Yellen's speech at the conference underway in Washington on the implementation and planning of post-crisis monetary policy. The number one of the Fed reiterated that there is a good chance that the interest rates of the US central bank will be raised this year, but once again she did not offer details on the timing of the implementation of the hike. No comment on the US economic and monetary outlook either.
Yellen recalled that, in the global context created after the crisis, it is crucial that central banks explain how monetary policy is implemented and transmitted to the economy. “After the financial crisis – he said – the Fed and the other central banks developed and launched unconventional monetary measures. The opportunity was offered to evaluate new policies and issues associated with monetary policy and the effectiveness of the various options”.
According to Yellen, central banks "need to weigh carefully the advantages and disadvantages of applying alternative monetary frames", taking into account "new channels of transmission of monetary policy that have emerged from the intricate economic and financial linkages of the global economy", highlighted by the crisis.
The number one of the Fed explained that it is essential that we understand the effects of regulation and possible changes in financial intermediation. Yellen further explained that the Fed is committed to "assessing the potential application of long-term monetary policy frames and evaluating the many issues associated with the various possible frames."
The position of the International Monetary Fund is much more explicit, which after Yellen's words reiterated its opposition to a rate hike in 2015. "It should wait for clear signs of a rise in inflation to be added to the continued strengthening of the labor market" , says the Washington institution in the report drawn up in view of the G20, which will take place on 15 and 16 November in Antalya, Turkey.
"The Fed hike - adds the IMF - could increase market volatility, with movements potentially able to create disturbance on capital flows and asset prices". A message that actually follows what was already written in the recent World Economic Outlook, in October, and on previous occasions, but the repetition of which risks not simplifying the way for the Fed led by Janet Yellen, in imparting this change to US monetary policy.
"The Fed's decisions should continue to be based on data and the communication strategy remains essential - concludes the IMF - especially in a context of market volatility".
