Date
25 July 2017
Fed Chairwoman Janet Yellen testifies before a House Financial Services Committee in Washington on Wednesday. Photo: Reuters
Fed Chairwoman Janet Yellen testifies before a House Financial Services Committee in Washington on Wednesday. Photo: Reuters

Yellen: Rate hike in December is ‘live possibility’

US Federal Reserve Chairwoman Janet Yellen hinted at an interest rate action next month, saying Wednesday that a December liftoff is “live possibility” if the economy remains on track.

Appearing before a House Financial Services Committee, Yellen said the Fed expects that “the economy will continue to grow at a pace that is sufficient to generate further improvements in the labor market and to return inflation to our 2 percent target over the medium term”.

“If the incoming information supports that expectation then our statement indicates that December would be a live possibility,” she said in Washington.

William Dudley, the president of the New York Fed, said later in the day that he would “completely agree” with Yellen, Reuters reported.

December “is a live possibility, but we’ll see what the data shows,” Dudley was quoted as telling reporters in New York.

Yellen, Dudley and the other 15 Fed policymakers now have six weeks to analyze new data before deciding whether to begin the rate liftoff at a meeting in mid-December.

Moving sooner rather than later will allow the Fed to take a gradual approach to further hikes, slow enough to ensure that housing and other key markets are not disrupted by rising rates, Yellen said.

“Moving in a timely fashion – if the data and the outlook justify such a move – is a prudent thing to do because we will be able to move in a more gradual and measured pace,” she said.

“It’s been a long time that interest rates have been at zero, but markets and the public should be thinking about the entire path of policy rates over time. And the committee’s expectation is that will be a very gradual path.”

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CG/RC

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