SAN FRANCISCO: The Federal Reserve is considering raising near-zero interest rates this year even though this may slow the US recovery, Fed Chair Janet Yellen said.
The Federal Open Market Committee is now “giving serious consideration to beginning to reduce later this year some of the extraordinary monetary policy accommodation currently in place,” Yellen said in a speech in San Francisco, according to the prepared text.
Yellen emphasized that the FOMC was taking a “gradualist approach” as it weighs whether the economy is strong enough to weather higher rates.
Earlier this month, the Fed’s policy arm opened the door to a federal funds rate hike as early as midyear, dropping the word “patient” in its post-meeting statement.
But a string of weak economic data, particularly in consumer spending, housing and manufacturing, has muddied the outlook for an increase in rates pegged at the zero level for more than six years.
The central bank took note of the sluggishness in mid-March, saying that growth prospects were more muted than they were just three months ago.
The US central bank slashed 0.3 percentage point from its growth forecast for this year, to 2.3-2.7 percent, in part because American households had tailed back spending.
Still, the recovery from the Great Recession that ended in 2009 appeared on track enough to sustain a rate hike.
“With continued improvement in economic conditions, an increase in the target range for that rate may well be warranted later this year,” Yellen said at a conference sponsored by the Federal Reserve Bank of San Francisco.
The Fed’s ultra-low rate has supported a sizable reduction in labor market slack over the past two years, she said, and appears to be leading to “further substantial gains.”
“A modest increase in the federal funds rate would be highly unlikely to halt this progress, although such an increase might slow its pace somewhat,” the Fed chief acknowledged.
“We view Yellen’s remarks as attempting to shift the debate from ‘when’ to ‘how fast’ and communicating a gradual tightening cycle,” Barclays analyst Michael Gapen said.
Her remarks came after the Commerce Department earlier in the day left unchanged its estimate of fourth-quarter gross domestic product growth at an annual rate of 2.2 percent.
The GDP number disappointed analysts, who expected a revision upward to a 2.4 percent pace that would show the economy had greater momentum going into 2015.
“The first quarter looks even softer, in part due to adverse weather, but abstracting from the vagaries of the quarterly data, real growth appears to be trending close to a respectable three percent pace,” said Scott Hoyt of Moody’s Analytics.
Federal Reserve weighs rate hike ‘this year’: Janet Yellen
Federal Reserve weighs rate hike ‘this year’: Janet Yellen
Closing Bell: Saudi main index slips to close at 10,588
RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Sunday, losing 127.15 points, or 1.19 percent, to close at 10,588.83.
The total trading turnover of the benchmark index was SR2.57 billion ($685 million), as 28 of the stocks advanced and 232 retreated.
Similarly, the Kingdom’s parallel market Nomu lost 108.53 points, or 0.46 percent, to close at 23,719.13. This comes as 22 of the stocks advanced while 47 retreated.
The MSCI Tadawul Index lost 17.17 points, or 1.22 percent, to close at 1,393.34.
The best-performing stock of the day was Sport Clubs Co., whose share price surged 3.69 percent to SR9.00.
Other top performers included Flynas Co., whose share price rose 2.55 percent to SR72.30, as well as National Industrialization Co., whose share price surged 2.13 percent to SR10.09.
Consolidated Grunenfelder Saady Holding Co. recorded the most significant drop, falling 6.61 percent to SR8.90.
Sustained Infrastructure Holding Co. also saw its stock prices fall 5.75 percent to SR30.82.
CHUBB Arabia Cooperative Insurance Co. also saw its stock prices decline 5.72 percent to SR22.40.
On the announcements front, Wataniya Insurance Co. said it has received a notice of award for a one-year contract with Saudi National Bank to provide general insurance as well as protection and savings insurance services, in line with agreed terms and conditions.
According to a Tadawul statement, coverage will begin on Jan. 1, 2026. The contract value exceeds 15 percent of the company’s total revenues, based on its latest audited financial statements for 2024.
Wataniya Insurance Co. ended the session at SR14.35, up 1.92 percent.
Fawaz Abdulaziz Alhokair Co., or Cenomi Retail, has announced executing a SR1.5 billion facility agreement structured as a short-term loan with Emirates NBD – Kingdom of Saudi Arabia. A bourse filing revealed that the financing duration is three years with an option to extend for a total of two years.
Cenomi Retail ended the session at SR20.00, up 0.26 percent.
First Milling Co. has announced the Board of Directors’ recommendation to amend the firm’s bylaws Article “Company Management” to increase the number of board members from seven to eight. This change reflects the firm’s commitment to broadening the range of expertise and skills on its board, in line with its growth and expansion plans for the next phase.
The company reiterated its commitment to fulfilling all necessary procedures and obtaining approvals from the relevant authorities. The recommendation will be submitted to the upcoming General Assembly, with the date to be announced in due course.
First Milling Co. ended the session at SR49.22, down 1.06 percent.
