Daily Market Report – 17/07/2015 USD Federal Reserve Chairwoman Janet Yellen on Thursday said the U.S. labour market had moved demonstrably closer to a more normal state, a reason why the central bank is likely to raise short-term interest rates later this year. Ms. Yellen again avoided specifying exactly when the Fed is likely to start lifting its benchmark rate from near zero. Most of the U.S. central bank’s policy makers have said they expect to start raising the rate this year if the economy USD Federal Reserve Chairwoman Janet Yellen on Thursday said the U.S. labour market had moved demonstrably closer to a more normal state, a reason why the central bank is likely to raise short-term interest rates later this year. Ms. Yellen again avoided specifying exactly when the Fed is likely to start lifting its benchmark rate from near zero. Most of the U.S. central bank’s policy makers have said they expect to start raising the rate this year if the economy continues to strengthen as they forecast, and many private economists consider September the likely time for a rate rise. Ms. Yellen highlighted improvement in the labour market and the broader economy as reasons why the Fed is likely to raise rates in the months ahead. While wage growth has been sluggish for years, the Labour Department’s employment-cost index, has seen a “meaningful pick-up” in the past year. “I would expect to see some further upward movement” in wage growth going forward, she said, while cautioning that “where they can go depends in part on productivity growth.” To address slow productivity growth, Ms. Yellen gave Congress a to-do list, suggesting policies to improve education and entrepreneurship as well as increasing capital investment, both public and private. EUR The eurozone’s inflation rate dipped slightly from 0.3% in May to 0.2% in June. This reading marks the second month of a return to inflation after five months of flat or falling prices. The rise in prices was due in part to an increase in food and beverage costs, which were 1.2% higher. In March, the ECB began a €1 trillion stimulus programme to boost economic activity in the Eurozone and this policy may now be beginning to have a positive impact on inflation. Mario Draghi announced that the ECB had raised its Emergency Liquidity Assistance to Greek banks for the first time since late June, by €900 million. Mr. Draghi said the amount was as advised by the Bank of Greece. It’s a move that could lead to a reopening of the banks in coming days, but the return to normality will take much longer. Also Mr Draghi said recovery is “broadening” but it is still less than satisfactory. GBP Bank of England governor Mark Carney has indicated that UK interest rates could rise “at the turn of this year”. In a speech at Lincoln Cathedral he said that he expected rates to rise over the next three years, reaching “about half as high as historical averages”, or about 2%. However he added that shocks to the economy could change the timing and the size of any rate rise. Interest rates have been at 0.5% for six years as the UK economy recovers from the financial crisis. Carney stated that “Short term interest rates have averaged around 4.5% since around the Bank’s inception three centuries ago. Key Announcements 13:30 – USD: US Consumer Price index (YOY) June expected to be higher at 1.8% from 1.7%