Date
10 December 2016
US Federal Reserve chair Janet Yellen testifies before a Congressional committee in Washington, DC on Thursday. Photo: Reuters
US Federal Reserve chair Janet Yellen testifies before a Congressional committee in Washington, DC on Thursday. Photo: Reuters

Yellen: Fed may raise rates ‘relatively soon’

The United States Federal Reserve could raise interest rates relatively soon, given the encouraging employment and inflation data, the central bank’s chief said on Thursday.

The results of the US presidential election have not altered the Fed’s assessment following its last meeting that the case for a rate hike has strengthened, Janet Yellen told a Congressional panel in Washington D.C.

“At this stage I do think that the economy is making very good progress toward our goals, and that the judgment the [Fed policy] committee reached in November still pertains,” the Fed chairwoman said, according to the Wall Street Journal.

Evidence officials received since their last meeting affirms their expectations for stronger economic growth, an improving job market and rising inflation, Yellen was quoted as saying.

The comments, made before the Congress’ Joint Economic Committee, bolster expectations that the Fed will raise its benchmark federal-funds rate at its next meeting on Dec. 13-14, the Journal noted.

Yellen warned that holding off on a rate increase for too long could force the Fed to raise rates relatively abruptly in the future to keep the economy from overheating.

But she said the near-term risk of “falling behind the curve” soon is limited, and reiterated that the the central bank expects to raise interest rates gradually over the next few years.

That could change, however, if Congress moves forward with president-elect Donald Trump’s proposal for a large fiscal-spending package next year.

She said the Fed will watch what Congress does next year and update its economic outlook to take those changes into account.

In other comments, Yellen quashed speculation that she may leave the central bank after Trump takes office, the Journal reported.

“It is fully my intention to serve out that term,” Yellen was quoted as saying when asked about the possibility that she may leave before her four-year term ends in February 2018.

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RC

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