Enabling the addiction

TIME for equity investors to send Janet Yellen some champagne, or at least a bunch of flowers. Once again, markets are rising because of something that a central banker said. In a speech yesterday, Ms Yellen highlighted the complex relationship between central banks and markets. Recall that the Fed raised rates in December. Ms Yellen first notes that

The proviso that policy will evolve as needed is especially pertinent today in light of global economic and financial developments since December, which at times have included significant changes in oil prices, interest rates, and stock values. 

Those market declines don't mean that the Fed has altered its outlook for economic growth and inflation. But they were still important because, she adds

investors responded to those developments by marking down their expectations for the future path of the federal funds rate, thereby...Continue reading

Source: Business and finance http://ift.tt/1Sxb42b

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