Janet Yellen And Her Historical Announcement

Janet_Yellen_official_portrait

For the second time in March the Nasdaq surpassed 5000, a sign of good economic times. This due almost entirely because of Janet Yellen’s announcement ┬áthat the Fed will be raising rates in the near term. The S&P and The Dow had significant jumps as well.

As the dollar continues to strengthen exports are falling, the jobs outlook by the Fed is extremely bullish expecting the unemployment rate to fall to as low as 5%.

Yellen made sure to mention that she nor the Fed are providing any sort of certainty for the economy, but expects inflation to be 2% soon, after a period of inflation as low as 1.3%.

Yellen went on to say that a rate hike of the federal funds rate is not likely in April but the June meeting may include a rate hike depending on the data. She removed the word ‘patient’ from the statement on how long interest rates will remain at historic lows.

Since the financial crises the rate has essentially been zero, in an effort to facilitate growth for the US economy and get to full employment.

Overall this is very good news for the US economy whose currency is nearly at par with the Euro. After the announcement, however, as stocks soared the dollar rally against the Euro stalled and it now sits at .93 dollars to the euro.

If inflation goes back to 2%, as Yellen predicts, previous deflationary concerns and concerns about multi nationals ability to sell in a global market will no longer be worries.

Analysts have been predicting the dollar value to grow against the Euro for some time now with some estimates putting the Euro at parity with the dollar by the end of the year. Now they are thinking this timeline will shrink putting the Euro well below the dollar by the end of 2015.