Date
23 October 2017
Traders pause to watch Fed chief Janet Yellen discuss the US job market. Yellen reminded the market that the Fed's rate policy remains accommodative for now. Photo: Reuters
Traders pause to watch Fed chief Janet Yellen discuss the US job market. Yellen reminded the market that the Fed's rate policy remains accommodative for now. Photo: Reuters

Yellen tamps down rate expectations but liftoff seen this year

US interest rates will remain near zero for now but the Federal Reserve is leaning toward liftoff later this year amid signs economic activity is picking up.

Federal Reserve chief Janet Yellen is warning that the importance of such increases “should not be overstated” and the interest rate policy remains loose.

Earlier, Fed officials forecast an increase in short-term interest rates before the end of the year, according to the Wall Street Journal.

Benchmark rates have been near zero since December 2008.

The US central bank said economic activity has been expanding moderately after stalling in the winter and job growth has picked up.

Also, inflation is below its 2 percent target, held down by energy prices which have stabilized.

The median estimate for rates in 2016 has slipped to 1.625 percent from 1.875 percent in March while the median estimate for 2017 fell to 2.875 percent from 3.125 percent, WSJ says.

The Fed cut its economic growth projections for 2015 to 1.8 percent to 2 percent from 2.3 percent to 2.7 percent.

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