Yellen at Jackson Hole: No update on the outlook – Nomura

Chair Yellen’s speech at Jackson Hole focused on financial regulation before and after the crisis and noted that post-crisis regulation has improved financial stability without impeding growth materially, notes the analysis team at Nomura.

Key Quotes

“Importantly, she did not link financial stability to monetary policy, implying that the focus of conventional monetary policy remains on the dual mandate of price stability and maximum employment. Her subtle rebuke of the Trump administration’s approach to financial regulation makes her reappointment as Chair marginally less likely.”

“The conclusion of her speech, that increased regulation has not negatively affected growth, directly contrasts with the Trump administration’s policy position. To be clear, she argued that “any adjustments to the regulatory frameworks should be modest,” suggesting that she does not agree with the general trend of discussions on potential deregulation in Washington. We view this as marginally reducing the likelihood of her reappointment as Chair when her term expires in February 2018.”