Yellen’s speech today was consistent with the FOMC’s communication two weeks ago – dovish, if not a bit more so. It supported our more dovish stance than the consensus on rates.
She sees the bond market’s reaction to negative shocks in January and early February as stabilizing: it helped limit the fallout from the shocks to the real economy.
In Yellen’s view, the FOMC’s reaction function didn’t shift in March; the facts about the global economy did.
Apparently there are few domestic risks on the Fed’s horizon, aside from credit markets – mostly the risks are foreign ones.
Easing options were mentioned, but not negative rates.
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BNPP's FOMC call is for no Fed hikes for the rest of the year.