Yellen may hint at 2015 hike in today's speech: JPMorgan

US Federal Reserve inaction last week -- it kept rates unchanged -- sent out a confusing message to market participants that it was probably worried about slowing global growth, says James Glassman, Senior Economist, JPMorgan. This confusion could have led to the risk-off stance in the market.

However, Glassman believes it was not Fed's intention to send confusing signals and it is unlikely that they know more than others about what is happening globally. It could just be that they were buying more time.

People are now waiting for Janet Yellen speech on Thursday in Amherst, Massachusetts, on “Inflation Dynamics and Monetary Policy.” She is expected to confirm or deny rate hike in 2015.

He does not expect Yellen to deny the 2015 liftoff or rate hike. The main message people would be looking out for is whether she is really nervous about the global economy, says Glassman in an interview to CNBC-TV18.Below is the transcript of James Glassman's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18. Latha: We didn’t get too much by way of cues from the US overnight. Is it that there is a selling exhaustion that despite that lower than expected purchasing managers' index (PMI), the risk of a slowing China has been priced in? A: I think the problem in the US is more the impression on the Fed has been little confused because people interpreted the Fed in action to be a sign that they are worried about what is going on globally and I think that message probably was not the message the Fed was trying to convey. So people are sitting, waiting to hear Janet Yellen clarify this message a bit. Tomorrow there is an important speech she gives, so that maybe contributing to the risk-off stance of the market. That often happens when Central Bank surprised people and they seem nervous about something. We are thinking that the Fed is just wanted to buy a little more time, it is not that they know anything about what is going on globally that we don’t know. However, I think that commentary and that position of the Fed probably contributed to this nervousness that you see in the market. So we hope we get some clarity tomorrow, we think that the message from Janet Yellen will be a little more positive trying to correct this impression that the Fed is nervous about what is happening abroad. So we will see what happens. Sonia: What about the situation in China, that seems to be getting from bad to worse in terms of some macro data. Do you think the worst is not over yet? A: The industrial sector seems to be struggling. The consumer sector from everything that we hear and can see seems to be doing okay. I do not know whether the worst is behind or not but the issue is that the currency has been rising pretty steadily over the last ten years. It has become less competitive, less proactive to be locating in China, so maybe China has been losing ground to others. I do not think that China's problems tell you that the global economy is struggling and maybe more a challenge faced by China. We can see for example, in Mexico; Mexico is a big competitor of China and we see a lot of activity going back to Mexico. So that maybe related to the issues that China is having. So whether the worst has passed for China - I do not know. I suspect the government has lots of resources and there are new plans to provide more fiscal stimulus. We think that may help. I think personally by the time we get to the end of the year, we may look back and not be worried about as China as we are right now.  Latha: Later today for us and tomorrow for you, the Yellen speech that you referred to will be with us, what will you watch out for whether she confirms or denies the 2015 lift off, the rate hike? A: I think she won't deny the 2015 lift off. The other members had been saying it was a close call that they did and they continue to believe that it is likely they are going to be lifting before the end of 2015. So I think the main message that people are listening for is -- is she that nervous about the global economy? My guess is she is going to be coming across with a more positive message and try to convey the Fed's decision to hold more a decision to take a little more time to assess the circumstances. So I think the message was a little confusing to people last week. I think this message maybe a little more positive and it will probably -- in my guess -- leave the impression that it is still very likely that the Fed starts something in one of the next two meetings.