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Friday, 1 April 2016


Madam Yellen has defied the age old male adage that women are not mentally transparent. She made things pretty translucent on Tuesday for global investors and the whole central banking community. Last December, she had raised hopes of US becoming again the only ray of hope for the depressed world economy. Though the hopes are still not dashed, they are dampened for a few quarters at least. The best thing was that she did her best to explain the systematic risks faced by the US economy and why they existed? It’s quantum of a jump from an era of hard nosed, obscure, insensitive to a more transparent and pragmatic monetary policy.

Her forceful speech made stock markets skip and prance justifying USA’s dependence on developed, developing and the sacred Emerging Markets. What one couldn’t miss was the cautious undertone of the whole discourse exhibiting underlying risk parameters faced by the largest economy of the world.

Though Yellen seemed optimistic about various scenarios which may lead to favorable inflation, manufacturing and job data for the US, uncertain global factors such as declining crude prices, slowing China, precarious Europe and Japan is forcing her to be more data dependent for future course of action. As a result, FED has indicated gradual progression for hiking interest rates in the coming quarters which is best for everyone. A responsible and sensitive FED will have spill over effects spreading calmness so badly needed by global trade and investment community.


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