"It would be a grave mistake for the Fed to commit to conduct monetary policy according to a mathematical rule"
- Janet Yellen, Fed Chair
U.S. producer prices rose more than expected in June, while core prices increased marginally, indicating some inflation at the factory gate. According to the Labor Department figures, PPI for final demand jumped 0.4%, up from the May's 0.2% drop. On an annual basis, the producer price index rose 1.9% in June, beating expectations for a 1.8% rise and down from 2% in the previous month. A separate report also showed a lift in the U.S. industrial production in June, the latest sign of improvement in consumer and business spending during the three months through June. Industrial production, which measures the output of the country's manufacturers, utilities, and mines, increased a seasonally adjusted 0.2% in June from the previous month.
Meanwhile, Janet Yellen, the Fed Chairwoman, said on Wednesday that it would be a big mistake to adopt a bill proposed by House Republicans to require the U.S. central bank to implement a formal, mathematical formula for determining the appropriate level for the benchmark interest rate, which have impact on other borrowing costs across the economy. This would lead to a greater political meddling in the Fed's affairs, curbing its independence and impairing its ability to manage the economy and respond to financial crises.
© Dukascopy Bank SA