11/04/2017 - Yellen Reiterates Gradual Rate Hike

USD

The Federal Reserve's plans to raise U.S. interest rates gradually are aimed at sustaining full employment and near-2-percent inflation without letting the economy overheat, Fed Chair Janet Yellen said on Monday. In the U.S. Treasury bond market, yields were little changed after Yellen's remarks.

"We think a gradual path of increases in short-term interest rates can get us to where we need to be, but we don’t want to wait too long to have that happen," she said. Yellen's comments largely echoed what she has said since then, and did not offer any new colour on the timing of the rate hikes, or of the Fed's eventual reduction of its $4.5 trillion balance sheet.

The Fed raised rates in March for only the third time since the Great Recession, and most Fed officials expect the central bank to raise rates at least two more times this year.

GBP

Britain's sterling climbed versus both the dollar and the euro on Monday. Moving up from a three-week low ahead of a packed week of data expected to show a tightening squeeze on the country's consumers. As signs begin to show that UK households are becoming more cautious about their spending. Figures from credit card firm Visa showed both a dip in monthly spending in March and the weakest quarterly rate since 2013 after what had been an strong end to 2016.
 

EUR

The European Central Bank will not exit its ultra-loose monetary policy faster than it considers appropriate by following the Federal Reserve, the ECB's vice president said on Monday. The ECB's official policy rate stands at zero as the inflation rate is still below the central bank's  2% target.
 
"We have, in Europe, an independent monetary policy and we don't follow the Fed or the Fed interest rates," Constancio said at a hearing in the European Parliament. He told the European parliament that each central bank should deal with its own domestic situation.

Key Announcements

09:30 – GBP: UK Consumer Price index (YoY) March, expected to fall to 1.9% from 2.0%
 
10:00 – EUR: German ZEW Economic Sentiment Index (April) expected to rise to 13.2 from 12.8