Federal Reserve Chair Janet Yellen said the case to raise interest rates is getting stronger as the U.S. economy approaches the central bank’s goals.
“In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months,” she said in the text of a speech Friday to central bankers and economists in Jackson Hole, Wyoming.
She also said the economy is “nearing” the Fed’s goals of full employment and stable prices. The Fed chair didn’t discuss the specific timing of a rate move in her first public comments since June.
The Federal Open Market Committee raised its target for the federal funds rate to a range of 0.25 percent to 0.5 percent in December, after keeping the benchmark near zero for seven years.
Despite their repeated intentions to raise the rate again, officials have skipped a hike at all five meetings this year, and futures markets have priced in about a 30 percent chance of another hike at the Sept. 20-21 policy meeting, the second-to-last gathering before presidential elections in November.
“While economic growth has not been rapid, it has been sufficient to generate further improvement in the labor market,” Yellen said at the Kansas City Fed’s annual conference, the title of which is “Designing Resilient Monetary Policy Frameworks for the Future.”
“Looking ahead, the FOMC expects moderate growth in real gross domestic product, additional strengthening in the labor market, and inflation rising to 2 percent over the next few years,” Yellen said in her prepared remarks.“Based on this economic outlook, the FOMC continues to anticipate that gradual increases in the federal funds rate will be appropriate over time to achieve and sustain employment and inflation near our statutory objectives.”
A Commerce Department report released earlier Friday showed the U.S. economy grew less than previously reported last quarter on lower government outlays and a bigger depletion of inventories, capping a sluggish first-half performance propped up mainly by consumer spending. Gross domestic product, the value of all goods and services produced, rose at a 1.1 percent annualized rate, down from an initial estimate of 1.2 percent, the report showed.
The Fed chair’s speech comes amid a reassessment among central banks globally about future strategies for monetary policies, a topic she addressed in the second half of her remarks. Ageing populations, declining productivity and below-target inflation rates are likely to result in lower peaks in their policy interest rates. That means central banks are likely to reach the zero boundary on their policy rates faster in the next recession.
San Francisco Fed President John Williams, Yellen’s former research director when she was head of that bank, urged central banks in an essay earlier this month to “carefully reexamine” their strategies, and mentioned the possibility of raising inflation targets, among other options. By contrast, David Reifschneider, a special adviser to Fed governors, argued in a paper that “even in the event of a fairly severe recession, asset purchases and forward guidance should be able to compensate” for the Fed’s limited scope to reduce short-term rates.
Her review of the Fed’s “toolkit” began with a spirited defense of techniques used during the financial crisis, including bond purchases and pledges to hold rates low for an extended period. She made clear the Fed should retain those new tools. Those may be needed again, she said, as the next recession may arrive before interest rates rise to levels normally seen during an economic recovery.
“We expect to have less scope for interest rate cuts than we have had historically,” she said.
Without embracing their views, Yellen acknowledged that economists, including some prominent Fed officials, have suggested the Fed consider broadening its asset purchases if that strategy is required again, and raising its inflation target. “The FOMC is not actively considering these additional tools and policy frameworks, although they are important subjects for research,” she said.
Crude Oil Rises Despite Demand Concerns as Hurricane Sally Disrupts Further Production
Oil Prices Surge as Hurricane Sally Disrupts Oil Production
Oil prices rose on Wednesday despite weak demand after strong hurricane sally threatens to disrupted operations of US oil producers amid a big drop in oil inventories.
Brent crude oil, against which Nigerian crude oil is measured, rose from $39.34 barrel on Tuesday to $41.58 per barrel on Wednesday.
Accordingly, the US West Texas Intermediate crude oil gained 1.8 percent to $38.96 per barrel.
American Petroleum Institute (API), a weekly oil projection report, on Tuesday reported that US crude oil inventories declined by 9.5 million barrels in the week ended September 11, 2020. This, experts at ING Research said if close to the real number due later today, could provide support for global oil prices.
The experts said, “If we see a number similar to the drawdown the API reported overnight, it would likely provide some immediate support to the market.”
This coupled with the fact that with reports that 25 percent of US offshore oil and gas output was halted and export ports were shut as the storm crawled offshore along the US Gulf Coast bolstered oil prices on Wednesday.
Oil prices gained despite OPEC lowering demand for the year, saying weak global recovery amid rising cases of COVID-19 will impact demand for the commodity through the first half of 2021.
Brent Crude Oil Dips to $39 as OPEC Lowers Oil Demand for the Year
Brent Oil Declines to $39 Amid Rising COVID-19 Cases
Brent crude oil declined further on Monday after the Organisation of the Petroleum Exporting Countries (OPEC) revised down global oil demand for the year.
The Organisation of the Petroleum Exporting Countries said growing economic uncertainties amid slow global recovery will continue to hurt demand for crude oil in 2020.
This, it attributed to the weaker than expected recovery in India and other Asian nations.
The Brent crude oil, against which oil Nigeria oil is priced, declined from $42.18 per barrel it traded Tuesday, September 8, 2020 to $39.26 per barrel on Monday during the New York trading session.
The commodity is now trading at its lowest since June 18, 2020.
In a report made available to the media, the cartel said the negative impact of COVID-19 on the global economy would persist through the first half of 2021.
The report said, “Additionally, risks remain elevated and skewed to the downside, particularly in relation to the development of Covid-19 infection cases and potential vaccines.”
“Furthermore, the speed of recovery in economic activities and oil demand growth potential in Other Asian countries, including India, remain uncertain,” it added.
Chancellor Merkel’s Africa Envoy, H.E. Günter Nooke, Leads Discussion on German investments in Africa
The discussion will be centred on the topic: Investment and Trade for Africa’s Economic Development
The webinar will be moderated by Sebastian Wagner, Executive Chair of the Germany Africa Business Forum and Gugu Mfuphi, Presenter of Kaya FM’s prime time business show, Kaya Bizz; the discussion will be centred on the topic: Investment and Trade for Africa’s Economic Development; panelists include NJ Ayuk, Chairman of the African Energy Chamber (EnergyChamber.org) and Rene Awambeng of the African Export-Import Bank; the webinar will be held on 23 September at 3PM CET. To attend, please register here.
With German visibility and participation on the rise in Africa’s energy industry, the Germany-Africa Business Forum (GABF) will host its second instalment of its Germany-Africa cooperation focused webinar series.
The webinar will facilitate the discussion on how FDI can sustainably strengthen the development of the African continent on September 23rd at 15:00 CET. Anchored by the topic Investment and Trade for Africa’s Economic Development, the webinar will highlight key efforts to mobilise German funding for African energy markets as a means to advance the German-African cooperation which can already be seen in Equatorial Guinea, Angola, South Africa, Nigeria, Egypt, Congo DRC, Senegal and recently, through the expression of interest by German investors in the DRC’s Inga III Dam.
The webinar, moderated by Sebastian Wagner, Executive Chair of the GABF and Gugu Mfuphi, Presenter of Kaya FM’s prime time business show, Kaya Bizz, will be opened by H.E. Günter Nooke, personal Africa representative of the German Chancellor Angela Merkel.
“We are honoured to announce that H.E. Günter Nooke will spearhead our webinar. With his vast and unmatched knowledge in both the German and African markets, he will be able to bring many interesting aspects of the discussion,” said Sebastian Wagner.
Joining the panel discussion will be NJ Ayuk, Chairman of the African Energy Chamber and Rene Awambeng, Vice President at the African Export-Import Bank. “With their expertise in the African finance and energy sector, we look forward to a high-ranking and diverse panel. Especially the energy sector is an important cornerstone of any African economy, and we are looking forward to the outcome of the discussion,” said Mr. Wagner.
German interest in Africa as an investment destination has continued to grow and we hope to see a more diversified investment beyond energy and sales of German products to Africa. Africa is and will continue to be an investment market with the potential for significant growth post-Covid and superior returns.
While South Africa and Egypt have seen a huge part of German investment, Ghana, Nigeria, Tanzania, Congo DRC and Zambia are considered hotspots for potential investors from Germany. Projects in the financial services, climate change, energy poverty, health care, energy transition, manufacturing, retail and consumer goods have seen a huge increase.
This event is in collaboration with the Africa Energy Chamber and Africa Oil and Power.
Business2 months ago
Nneka Ede Purchases Portuguese Football Club, Lusitano Ginasio Clube
News2 months ago
British High Commission to Start Accepting Visa Applications From Nigerians Soon
Business2 months ago
Seplat Appoints Emeka Onwuka as CFO, Executive Director
Forex2 months ago
Naira-USD Exchange Rate to Hit N430 – Report
Finance2 months ago
DSS Arrests EFCC, Acting Chairman, Magu
Government2 months ago
FG Puts School Resumption Plan on Hold as COVID-19 Cases Hit 30,000
Forex2 months ago
Naira Declines Against Pound, Euro After Devaluation
Business2 months ago
TAJBank Joins e-Commerce Giants- Launches Nigeria’s 1st Ethical Online Mall