The Fed doesn't understand the causes of inflation: Larry Kudlow

US pre-open: Stocks to nudge higher but Nike seen weak after mixed Q1

The Fed doesn't understand the causes of inflation: Larry Kudlow

As of late Wednesday morning, spot gold was around $1,286 an ounce.

US stocks crept higher as Janet Yellen warned that the Federal Reserve should be wary of tightening monetary policy too gradually. While she and other policymakers still think inflation will eventually reach the Fed's 2 percent target, Yellen conceded the Fed may need to change its assumptions. Unemployment has declined to roughly 4.5 percent over her term, while inflation remains lower than the Fed's preferred 2 percent benchmark. The U.K.'s FTSE 100 Index settled down 0.2%.

US officials emphasized the urgency of attempts at diplomacy to ease tensions with North Korea on Tuesday, while the USA stepped up sanctions amid an escalating war of words between Washington and Pyongyang.

The Trump administration and Republicans in Congress are due to announce a tax plan later on Wednesday.

United States stocks also gained on the speech, while USA president Trump's address due Wednesday detailing planned U.S. tax cuts, was also supportive.

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Evans' view appears to be in the minority at the Fed, where decisions on the appropriate level of interest rates are made every six weeks or so.

Each one presented valid arguments for their cases but Janet Yellen's speech before the 59th Annual Meeting of the National Association for Business Economics in Cleveland, Ohio proved why she's chair of the US Federal Reserve. "But if he (US President Donald Trump) just waffles without any substance, the market is looking for any reason right now to take risk off the table".

Oil prices remained stable on Wednesday, hovering near 26-month highs hit on Tuesday after US data showed an unexpected drop in crude stocks as refineries boosted output after threats from Turkey to cut crude exports from Iraq.

Yellen admits the Fed may have misjudged the strength of the labor market and the degree to which longer-run inflation expectations are consistent with its inflation objective, or even the fundamental forces driving inflation.

Both policymakers nodded to the three devastating hurricanes that have struck parts of the US south and the Caribbean, noting their effects will likely make it more hard to interpret economic data in coming months.

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In Europe, the German 10-year government bond took a cue from the US, rising more than 6 basis points to hit 0.464%.

-The MSCI Emerging Market index sank 0.8 percent to the lowest in more than a month.

-The MSCI All-Country World index fell 0.3 percent to the lowest in over two weeks.

Nasdaq 100 e-minis were up 5.5 points, or 0.09 percent, on volume of 29,784 contracts. The euro fell to $1.1788 from $1.1791.

CURRENCIES: The dollar rose to 112.41 yen from 112.23 yen. On the day, WTI crude traded 0.4% lower at $51.64 per barrel, while Brent was 1.1% down at $57.80.

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