Fed chair Yellen to be quizzed – Lloyds Bank

Today, the main global focus will be on US Fed Chair Yellen’s semi-annual testimony to Congress, according to analysts at Lloyds Bank.

Key Quotes

“Economic growth is expected to rebound from the soft outturn in Q1, while nonfarm payrolls increased by 222,000 in June, more than expected. Average hourly earnings growth, however, remained subdued at 2.5%, despite a low unemployment rate of 4.4%. US retail sales figures for June (Fri) will be closely watched to gauge the likely rebound in consumer spending in Q2. The recent backslide in inflation, however, has increased the risk that the next Fed hike is pushed out to December from our current central view of September. We look for a further fall in annual headline CPI to 1.6% in June from 1.9%, although the ‘core’ measure may edge up to 1.8% from 1.7% which would be the first increase since January. Yellen is also likely to be quizzed on the Fed’s intention to start reducing its balance sheet later this year.”