23 October 2016
Janet Yellen was generally upbeat in her testimony  on the economy to a congressional committee. Photo: AFP
Janet Yellen was generally upbeat in her testimony on the economy to a congressional committee. Photo: AFP

Fed on track for rate hike, Yellen sets floor for jobs growth

Janet Yellen has set a bottom line for jobs growth in the United States.

Speaking the day before a key employment report, the US Federal Reserve chairwoman said the US economy needs to add fewer than 100,000 jobs a month to accommodate new entrants to the workforce.

“To simply provide jobs for those who are newly entering the labor force probably requires under 100,000 jobs per month,” with anything above that helping “absorb” those who are unemployed, discouraged or had dropped out of the labor market, Yellen, who was speaking before Congress’ Joint Economic Committee, said in a question-and-answer session.

The November jobs report is scheduled for release at 8:30 a.m. Friday in Washington, providing a last key bit of economic data for the Fed before a policy meeting on Dec. 15-16 in which the US may raise interest rates for the first time in a decade.

Yellen said the United States may be “close to the point at which we should be raising” a benchmark interest rate that has been held near zero since the onset of the financial crisis seven years ago, Reuters reported.

Though the pivotal policy meeting is less than two weeks away, she said that will still hinge on whether incoming information supports the Fed’s outlook.

Job creation has been averaging around 200,000 a month this year, a figure Yellen said was “quite a bit” above the number needed to continue absorbing slack in the labor market.

Though unemployment at 5 percent is at or near the level many policymakers consider to be full employment, Yellen said that high levels of discouraged workers, part-time employment and other job market measures show there is still room for progress.

Yellen was generally upbeat in her testimony, spelling out how the economy has largely met the criteria the Fed has set for its first rate hike.

Unemployment is low, growth continues at a modest pace, and Yellen said she is confident inflation will return to the Fed’s target over time.

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