Yellen: “high-pressure economy” needed – UOB

Analysts at UOB Group noted that FOMC Chair Janet Yellen was speaking the Boston Fed conference (15 Oct, 1:30am Singapore time) on ‘The Elusive “Great” Recovery: Causes and Implications for Future Business Cycle Dynamics’.

Key Quotes:

"She said that the Federal Reserve may need to run a “high-pressure economy” to reverse damage from the 2008-2009 crisis that depressed output, sidelined workers, and risks becoming a permanent scar."

"Her remarks added to an intensifying debate within the Fed over whether economic growth is close enough to normal to need steady interest rate increases, or whether it remains subpar and scarred and some market analysts read her speech as echoing something similar to former U.S. Treasury Secretary, Lawrence Summers’ “secular stagnation” thesis."

"And the reaction from the US bond market was most intense as Yellen’s comment were interpreted as possibly Fed Reserve’s willingness to allow inflation to run beyond the Fed’s 2.0% target, sending US Treasury prices markedly lower with yields spiking higher across the curve."

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