- Yellen spoke for an hour, but the market only heard three words: “around six months.”"She was asked how long the Fed would wait after the tapering ends before it begins to raise interest rates.Her answer: “So the language that we used in the statement is considerable period. So I, you know, this is the kind of term it’s hard to define. But, you know, probably means something on the order of around six months, that type of thing.”She added lots of qualifiers to that, including the assessment of the labor market and the inflation outlook, but the markets only heard “around six months.”Which would mean the first rate hike could come in the middle of next year, rather than toward the end of the year as implied by the Fed’s “dot plot.”Did Yellen mean to be that specific? No, but she’s now the Fed chair, and markets will react to what she said, not what she means".
Source: Marketwatch
