Janet Yellen's speech on policy normalisation late Friday evening repeated many of the messages from the March FOMC meeting, see Highlights from Fed Chair Yellen's speech, 29 March.. Yellen repeated that a rate hike at some stage later this year is suitable in light of the recent improvements in the labour market but without committing to a precise timing of the first rate hike. Yellen also argued that after the first rate hike the pace of the increase in interest rates is likely to be slow and that the peak in interest rates is likely to be lower than usual.
Fitch late Friday downgraded Greece's sovereign rating to CCC (substantial credit risk) from B in an unscheduled rating announcement, see Reuters. Fitch's main arguments for the downgrade was that 'lack of market access, uncertain prospect of timely disbursement from official institutions and tight liquidity conditions in the domestic banking sector have put extreme pressure on Greek government funding'.
There appears to have been some progress in the negotiations between the Greek government and the three bailout monitors EU, ECB and IMF on a more detailed policy programme. Among others, it now appears that the government no longer plans to abolish the property tax. The Greek government hopes that an approval of a more detailed economic programme by the Eurogroup finance ministers next week will release a partial disbursement from the remaining EUR7.2bn aid tranche, as the EUR450m payment on an IMF loan next week could prove challenging.
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