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Yellen calms markets

Published Thursday, September 18th, 2014

The Federal Reserve reaffirmed its commitment to keep interest rates at record lows for a “considerable time”. A further $10 billion cut in QE paved the way for its stimulus programme to come to end next month. The prospect of an extended period of low rates soothed market concerns of an imminent rate hike and sent risk global equities higher with the Dow climbing 0.15% to close at a record high.

Although Janet Yellen struck a less hawkish tone than expected, the recent signs of an improving US economy caused her to hint that the eventual rise in borrowing costs may be quicker than many had originally thought. Her projections for the Federal Funds rate over the next couple of year have put the timing for the first hike by June 2015 at the latest. However, despite the slew of robust economic data, she maintained her view that the labour market remained slack with wage growth stubbornly sluggish. Evidence of this was seen as the Labor Department reported a surprising fall of 0.2% in US consumer prices in August – the first in almost 18 months.

Polling day has arrived in Scotland where the outcome remains on a knife’s edge as the last opinion poll put the “No” vote ahead by just four percentage points. A significant portion of the electorate is still largely undecided. The Union’s more than 300-year existence hangs in the balance with no let-up in campaigning until the bitter end.

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Posted by Tamas Varga

Tamas Varga has been in the oil industry since 1992 and with PVM for 18 years. During his time in the industry he has gathered a range of experience in the oil markets. At PVM Tamas is in charge of data collection and analysis.