Yellen in Boston

  • Short-term rate cuts alone may be inadequate in the future
  • Policy may want to be extra-accommodative in recoveries
  • Hard to quantify the costs and benefits of an accommodative strategy
  • Maintaining accommodation for too long could have costs
  • Forward guidance may be needed again by central banks
  • Costs could include financial instability and inflation
  • "High pressure" policy may be needed for recovery

She's speaking more in a theoretical tone here but it underscores her dovish leanings. You could extrapolate it to mean that she will wait longer but I think that's going to far. In her view, a hike in December is still very accommodative.

Beyond that it might get tricky. She could be starting to signal that only one or two hikes in 2017 is the baseline. On that angle, I think there is a case for USD selling here and better levels for stocks.