Yellen’s ‘data-dependent’ approach bodes well for markets, analyst says

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Federal Reserve Board Chairwoman Janet Yellen testifies before the House Financial Committee about the State of the economy on July 12, 2017 in Washington, DC.

Federal Reserve Chair Janet Yellen’s testimony to Congress has been well-received, both by the markets and most analysts.

Her talk about an unhurried and statistics-based approach to future decisions is what excited Jeff Krumpleman, CEO of Riverpoint Capital Management.

“What she said today is what the market wanted to hear,” he said on CNBC’s “Power Lunch” Wednesday. “The summary is, ‘We’re going to be gradual; we’re going to take our time and be measured. We’re going to be data-dependent.'”

Krumpleman said the Fed needed to do something because the dual mandate of maximizing employment and stabilizing prices is only being accomplished by half.

“Economic activity is solid,” he said. “The employment report illustrated that this Friday. Yet inflation is rolling over. Let’s take a baby step; let’s recognize the pull-and-tug between the two. Let’s do something but not go crazy.”

Michelle Meyer, Bank of America’s chief U.S. economist, agreed, saying the markets have been reacting positively to the news of the slow-and-steady approach.

“They’re talking about normalizing policy very slowly depending on how the data and the financial conditions react,” she said. “If you look at the past four hikes, financial conditions have actually eased following the hikes rather than tightened. So in that respect it seems like the market is taking it in stride and the economy is taking it in stride, as well.”