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Principale » Yields dip as Yellen avoids monetary policy in speech

Yields dip as Yellen avoids monetary policy in speech

26 Août 2017

The world's two most powerful central bankers on Friday delivered back-to-back warnings against dismantling tough post-crisis financial rules that the Trump administration blames for stifling US growth.

Her speech to the world's top central bankers in Jackson Hole, Wyoming, comes at a time when the chaos at the White House may make it more likely that she would be appointed to serve another four years to head the USA central bank.

Yellen reviewed the wreckage caused by the 2008 financial crisis, including the loss of almost 9 million jobs, and warned of the consequences of forgetting the damage done to the US and global economies.

Overhanging Yellen's speech was the possibility that it marks her final appearance in Jackson Hole as Fed chair.

US stocks got off to a strong start after President Donald Trump's chief economic adviser Gary Cohn said the White House would turn its attention to the long-awaited tax reform agenda next week.

Gapen said that by delivering overlapping messages, Yellen and Draghi could help amplify their points, but "in practice that's not the agenda the Trump administration is likely to seek". On a monthly basis, it is still down more than 2.5 percent so far in August.

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Cohn, in an interview with the Financial Times, also said that despite pressure on him to both resign from and stay in his post, he was "reluctant to leave". "We must all unite together against them", Cohn said. One candidate he has mentioned is Gary Cohn, a former Goldman Sachs senior executive who leads Trump's National Economic Council.

It could be her final appearance at the Jackson Lake Lodge as the Fed's leader, since her term is up in early February.

Yellen's familiarity among investors may be welcome to a White House facing an acrimonious political battle to avoid a debt ceiling deadline next month, and still reeling from criticism over its response to Charlottesville. Specifically, Yellen defended the annual stress testing of large banks, allowing regulators to assign stricter oversight to firms critical to the financial system, and permitting regulators to step in and wind down failing financial institutions.

Overall, Yellen said, "any adjustment to the regulatory framework should be modest and preserve the increase in resilience" in a financial system she said is now better able to weather future shocks.

Many Republican politicians have been urging a loosening in regulations, in particular the Dodd-Frank Act, which became law in 2010 and which aimed to protect consumers by ensuring no bank could be "too big to fail".

Texas Governor Greg Abbott asked President Donald Trump to preemptively declare Harvey a "major disaster" in order to speed federal assistance, issuing disaster declarations for 30 counties. He has, for example, nominated Randal Quarles to the key post of Fed vice chairman for bank supervision. And even in a speech largely supportive of the Dodd-Frank regime, she threw out a few deregulatory bones. The legislation has not advanced in the Senate, however.