Distraction of Greece aside, is all well with the world economy?

(Agencies) Updated: 2015-07-19 20:20

Bank of England Governor Mark Carney speaks at Lincoln Cathedral in Lincoln, England July 16, 2015. He was speaking as part of the Magna Carta Lecture Series taking place in Lincoln throughout the year. BoE's Carney said on Thursday the decision to raise interest rates from record lows would come into "sharper relief" around the end of this year as inflationary pressures become clearer. [Photo/Agencies]

CAVEAT EMPTOR

So are Yellen and Carney right to be signalling at least an end to near-universal easing?

Clearly they believe that domestic growth, job creation and inflation are on trend to warrant it. But their views are couched in caution.

Carney, for example, has said that interest rates will rise only gradually from their record low of 0.5 percent, and to lower levels than in the past.

Meanwhile, Yellen told Congress that risks remain, notably from spillover from the Greek and Chinese crises. But she added:

"The importance of the initial step to raise the federal funds rate target should not be overemphasised."

Paul Mortimer-Lee of BNP Paribas noted that Yellen expects the path of rate normalisation to be "gradual", steepening or easing depending on how data pans out.

Part of the reason for this caution is that economic data has not been universally positive.

Britain, for example, has seen prices bump close to deflation and the jobless rate rise for the first time in more than two years, although it is in much better shape than it was.

In the United States, manufacturing is expanding but is highly vulnerable to a strengthening dollar. Retail sales fell in June and May was revised downwards, real weekly wage earnings have slipped lately, and inflation remains weak at just 0.1 percent year-on-year.

It still may be growing at around 3 percent, though.