The US Federal Reserve is on track to raise interest rates this year as long as inflation remains stable and the economy is strong enough to boost employment, its chairwoman Janet Yellen said on Thursday.
Speaking a week after the Fed delayed a long-anticipated rate hike, Yellen said she and other Fed policymakers do not expect recent global economic and financial market developments to significantly affect the central bank’s policy, Reuters reported.
In a speech at the University of Massachusetts, Amherst, Yellen said members of the Federal Open Market Committee expect the US economy to be strong enough to achieve maximum employment and to keep expectations for prices stable.
Much of the recent price weakness is due to special factors such as a strong dollar and low oil prices, which are likely to fade, Yellen said, expressing confidence that an inflation target of 2 percent can be achieved.
“Most FOMC participants, including myself, currently anticipate that achieving these conditions will likely entail an initial increase in the federal funds rate later this year, followed by a gradual pace of tightening thereafter,” Yellen said.
At the moment, US economic prospects “generally appear solid”, she said.
A prudent strategy is to “begin tightening in a timely fashion and at a gradual pace, adjusting policy as needed in light of incoming data”, the Fed chief added.
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