Janet Yellen sets stage for policy debate

Federal Reserve chair Janet Yellen delivered a speech at the end of the week which some market observers characterised as implicitly more 'dovish' than her speech following the US central bank's 21 September policy meeting.

Speaking at Boston Fed's 60th annual economic conference, Yellen delivered a speech entitled "The Elusive 'Great' Recovery: Causes and Implications for Future Business Cycle Dynamics".

In her speech, Yellen discusses several areas where the current economic cycle had revealed shortcomings in economists' collective knowledge.

Yellen placed special emphasis on so-called 'feed-back' loops between changes in US monetary policy and its effects on the rest of the world which later on ricochet back on the States.

Her remarks came against a backdrop of several large investment banks and brokers recently cautioning clients to expect a slower pace of Fed hikes over the coming year than US rate-setters had thus far indicated.

Some recent market commentary had also recently highlighted how the expected changes to the FOMC's members in 2017 would result in a more dovish Fed.

Following her remarks and as of 1918 BST the US dollar spot index was higher by 0.40% to 97.94 and the yield on the policy-sensitive two-year US Treasury note off by one basis point to 0.82%, having hit an intra-day low of 0.8146%.