Make us your home page
Instagram

Yellen remark rattles stock market

Janet Yellen, the new Fed chairwoman, spoke with reporters Wednesday. 

Janet Yellen, the new Fed chairwoman, spoke with reporters Wednesday. 

WASHINGTON — Janet Yellen tried at her first news conference as Federal Reserve chairwoman to clarify a question that has consumed investors: When will the Fed start raising short-term interest rates from record lows?

Yellen stressed that with the job market still weak, the Fed intends to keep short-term rates near zero for a "considerable" time and would raise them only gradually. And she said the Fed's move wouldn't be dictated solely by the unemployment rate, which she feels no longer fully captures the job market's health.

But Yellen might have confused investors when she went further. She suggested that the Fed could start raising short-term rates six months after it halts its monthly bond purchases, which most economists expect by year's end. That would mean short-term rates could rise by mid 2015.

A short-term rate increase would elevate borrowing costs and could hurt stock prices. Stocks fell after Yellen's mention of six months. The Dow Jones industrial average ended the day down more than 100 points.

The Fed's latest statement, issued after a two-day meeting ended Wednesday, said its benchmark short-term rate could stay at a record low "for a considerable time" after the Fed's monthly bond purchases end. The Fed has been gradually paring its monthly bond purchases, which have been intended to keep long-term loan rates low. Most analysts expect the purchases to end by December.

"This is the kind of term it's hard to define," Yellen said of "considerable time."

"Probably means something on the order of six months, or that type of thing."

Yellen devoted much of her news conference to explaining why the economy still needs a boost from the Fed. She said low inflation and meager pay raises for many workers reflect a weaker recovery than the decline in the unemployment rate may indicate.

Yellen remark rattles stock market 03/19/14 [Last modified: Wednesday, March 19, 2014 8:16pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. For Gov. Rick Scott, 'fighting' could mean vetoing entire state budget

    State Roundup

    Every day, Gov. Rick Scott is getting a lot of advice.

    The last time a Florida governor vetoed the education portion of the state budget was in 1983. Gov. Bob Graham blasted fellow Democrats for their “willing acceptance of mediocrity.”
  2. Potential new laws further curb Floridians' right to government in the Sunshine

    State Roundup

    TALLAHASSEE — From temporarily shielding the identities of murder witnesses to permanently sealing millions of criminal and arrest records, state lawmakers did more this spring than they have in all but one of the past 22 years to chip away at Floridians' constitutional guarantees to access government records and …

    The Legislature passed 17 new exemptions to the Sunshine Law, according to a tally by the First Amendment Foundation.
  3. Data breach exposes 469 Social Security numbers, thousands of concealed weapons holders

    Corporate

    Social Security numbers for up to 469 people and information about thousands of concealed weapons holders were exposed in a data breach at Florida the Department of Agriculture and Consumer Services. The breach, which the agency believes happened about two weeks ago, occurred in an online payments system, spokesperson …

    Commissioner of Agriculture Adam Putnam on Monday that nearly 500 people may have had their Social Security numbers obtained in a data breach in his office.
[Times file photo]

  4. Trigaux: Can Duke Energy Florida's new chief grow a business when customers use less power?

    Energy

    Let's hope Harry Sideris has a bit of Harry Houdini in him.

    Duke Energy Florida president Harry Sideris laid out his prioriities for the power company ranging from improved customer service to the use of more large-scale solar farms to provide electricity. And he acknowledged a critical challenge: People are using less electricity these days. [SCOTT KEELER   |   Times]
  5. Citigroup agrees to pay nearly $100 million fine for Mexican subsidiary

    Banking

    NEW YORK — Citigroup has agreed to pay nearly $100 million to federal authorities to settle claims that a lack of internal controls and negligence in the bank's Mexican subsidiary may have allowed customers to commit money laundering.

    Citigroup has agreed to pay nearly $100 million to federal authorities to settle claims that a lack of internal controls and negligence in the bank's Mexican subsidiary may have allowed customers to commit money laundering. 
[Associated Press file photo]