• Language
  • App
  • Subscriptions
  • Specials
  • Sign-In
  • Register
GeStepAhead GrowMyMoney master your money
Moneycontrol

Home » News » World News

Feb 15, 2017, 07.56 AM | Source: Reuters

Fed on course to raise interest rates: Janet Yellen

Yellen said delaying rate increases could leave the Fed's policymaking committee behind the curve and eventually lead it to hike rates quickly, which she said could cause a recession.

Like this story, share it with millions of investors on M3

Fed on course to raise interest rates: Janet Yellen

Yellen said delaying rate increases could leave the Fed's policymaking committee behind the curve and eventually lead it to hike rates quickly, which she said could cause a recession.

Post Your Comments

Share Cancel

Fed on course to raise interest rates: Janet Yellen
The Federal Reserve will likely need to raise interest rates at an upcoming meeting, Fed Chair Janet Yellen said on Tuesday, although she flagged considerable uncertainty over economic policy under the Trump administration.

Yellen said delaying rate increases could leave the Fed's policymaking committee behind the curve and eventually lead it to hike rates quickly, which she said could cause a recession.

"Waiting too long to remove accommodation would be unwise," Yellen told the US Senate Banking Committee, citing the central bank's expectations the job market will tighten further and that inflation would rise to 2 percent.

"At our upcoming meetings, the committee will evaluate whether employment and inflation are continuing to evolve in line with these expectations, in which case a further adjustment of the federal funds rate would likely be appropriate."

Yellen did not say if Fed policymakers expected the economy would warrant three interest rate increases this year, as they last signalled in December. Nor did she give indications whether the first rate hike of the year might come at its next meeting in March or at the June meeting, which is when most analysts expect a rate increase.

"I can't tell you which meeting it would be," she said, including specifying "whether it's March or May or June."

Since the end of the 2007-09 recession, the Fed has raised rates once in December 2015 and again in December of last year.

Yellen added that Fed policymakers would be discussing in the coming months how the central bank will eventually reduce the size of its bond portfolio, which ballooned during the financial crisis as the Fed sought to keep rates low. She repeated the Fed's guidance that reducing its holdings would begin when the Fed's current cycle of rate hikes is well under way.

Yellen was appearing in Congress for the first time since Republicans took control of the White House and both houses of the legislature and she nodded to the uncertainties over the direction of US economic policy.

"Changes in fiscal policy or other economic policies could potentially affect the economic outlook," she said. "It is too early to know what policy changes will be put in place or how their economic effects will unfold."

President Donald Trump has announced a rollback of financial regulation with few details and there is no clarity on the size and scope of the tax cuts he has promised, while possible new taxes on imports and increased infrastructure spending could boost inflation.

Inflation has remained persistently below the Fed's 2 percent target for several years and Yellen said it was "reassuring" that market-based measures of inflation compensation had recently risen, though she noted they remain low.

Yellen said she did not want to weigh in on specific tax and spending proposals, but she urged policymakers to consider the importance of making US businesses more efficient, which economists believe is essential to raising living standards over the long term.

"I would also hope that fiscal policy changes will be consistent with putting US fiscal accounts on a sustainable trajectory," she said.

Buy, Hold, Sell ? Hear it first on M3
Fed on course to raise interest rates: Janet Yellen

See all

Get started using your favorite social network

or

Login using moneycontrol ID

Username
Password

Need help logging in? Reset password.

Don´t have an account? Sign Up

Get started using your favorite social network

or

Simply sign up using this short form

* mandatory

UserName*

Username should be atleast 4 character

Password*

Password should be 8 or more characters,
atleast 1 number, 1 symbol & 1 upper case letter

Alert

Your Password should contain
  • 8 or more characters
  • At least 1 number
  • At least 1 symbol
  • At least 1 upper case letter
Confirm Password*
Email
Already have an account? Login