The latest Fed policy discussion reveals twitchy central bankers, as inflation remains stubbornly low. It all points towards a tense week for Janet Yellen when she addresses Congress. Laura Frykberg reports.
An increase in inflation is still out of reach in most developed economies... In the U.S., not least because of fading hope, that the new administration will return to fiscal policy... With Donald Trump yet to implement his tax cut agenda.. Despite this, the latest minutes from the Fed's policy discussion shows central bankers split over inflation... Likely to put pressure on Chair Janet Yellen when she testifies to both houses of Congress this week. (SOUNDBITE) (English) CHIEF ECONOMIC ADVISER, CEBR, VICKY PRYCE, SAYING: "What people continue to think about monetary policy in particular, that has certainly nerved the markets and we've seen that in terms of the way their yields have moved and share similar because obviously anything that raises interest rates is likely to be quite a negative on growth." Wage inflation across most of the developed world...has not picked up as central bankers had predicted The Fed, however, appears set on further interest rate rises.. and is now contemplating how and when to reduce its $4.5 trillion balance sheet, bloated by years of mass asset purchases as stimulus. It's not only Yellen who might set the mood this week. The Bank of Canada meets on Wednesday to set policy.. Following a run-up in the Canadian dollar. Markets are leaning towards expecting the first rate rise in nearly seven years.