Yellen says Fed could raise interest rates 'relatively soon'

Record ID: 78538

  • Title: Yellen says Fed could raise interest rates 'relatively soon'
  • Date: 17th November 2016
  • Summary: WASHINGTON, D.C., UNITED STATES (NOVEMBER 17, 2016) (UNRESTRICTED POOL - Broadcasters: NONE Digital: NONE) WIDESHOT U.S. FEDERAL RESERVE BOARD CHAIR JANET YELLEN SEATED AT A HEARING OF THE U.S. JOINT ECONOMIC COMMITTEE WIDESHOT HEARING ROOM COMMITTEE MEMBERS LOOKING ON (SOUNDBITE) (English) U.S. FEDERAL RESERVE BOARD CHAIR JANET YELLEN SAYING: "At our meeting earlier this month, the Committee judged that the case for an increase in the target range had continued to strengthen and that such an increase could well become appropriate relatively soon if incoming data provide some further evidence of continued progress toward the Committee's objectives. This judgment recognized that progress in the labor market has continued and that economic activity has picked up from the modest pace seen in the first half of this year. And inflation, while still below the Committee's 2 percent objective, has increased somewhat since earlier this year." SENATOR DAN COATS, A REPUBLICAN OF INDIANA, LOOKING ON WIDESHOT HEARING ROOM (SOUNDBITE) (English) U.S. FEDERAL RESERVE BOARD CHAIR JANET YELLEN SAYING: "The stability of the unemployment rate, combined with above-trend job growth, suggests that the U.S. economy has had a bit more room to run than anticipated earlier. This favorable outcome has been reflected in the labor force participation rate, which has held steady this year despite an underlying downward trend stemming from the aging of the U.S. population. While above-trend growth of the labor force and employment cannot continue indefinitely, there nonetheless appears to be scope for some further improvement in the labor market." WIDESHOT HEARING ROOM / COMMITTEE MEMBERS LOOKING ON
  • Embargoed: 2nd December 2016 15:41
  • Keywords: Janet Yellen Federal Reserve interest rates economy monetary policy
  • Location: WASHINGTON, D.C., UNITED STATES
  • City: WASHINGTON, D.C., UNITED STATES
  • Country: USA
  • Topics: Budget/Taxation/Revenue,Government/Politics
  • Reuters ID: LVA00158U3E4N
  • Aspect Ratio: 16:9
  • Story Text:The Federal Reserve could raise U.S. interest rates "relatively soon" if economic data keeps pointing to an improving labor market and rising inflation, Fed Chair Janet Yellen said on Thursday (November 17) in a clear hint the U.S. central bank could hike next month.
    Yellen said Fed policymakers at their meeting earlier in November judged that the case for a rate hike had strengthened.
    "Such an increase could well become appropriate relatively soon," Yellen said in her first public comments since the United States elected Republican Donald Trump to be the country's next president.
    Yellen said the economy appeared on track to grow moderately, which would help bring about full employment and push inflation toward the Fed's 2 percent target.
    The Fed chair gave a generally upbeat assessment of an economy that continues to generate jobs at a pace adequate to absorb new employees and keep others engaged in work. Wage growth "has stepped up," Yellen said. Consumer spending, critical as the major component of U.S. gross domestic product, "continued to post moderate gains," and help economic growth rebound from a weak first half. She said she expects firming in global growth, for months now considered a primary risk given weakness in Europe and China.
    Indeed the major question mark for the Fed may now be the actions of the president-elect. His cabinet and policies are still taking shape. But the proposals outlined in his campaign could change the Fed's baseline outlook substantially if he follows through on plans to cut taxes, roll out hundreds of billions of dollars in new infrastructure spending, and rip up free trade agreements.
    Yellen did not mention the election in her prepared remarks. Other Fed officials in recent days have said a major change in fiscal policy could force them to shift gears if, for example, inflation begins to accelerate. But they also said they need to wait and see what the new administration proposes and what gets approved by the Republican-controlled Congress.
    As it stands, Yellen said the current federal funds rate of between 0.25 and 0.5 percent is boosting economic activity, and that the country has "a bit more room to run" before inflation becomes much of a concern.
    Right now, she said, "the risk of falling behind the curve in the near future appears limited," and warrants only a gradual increase in the federal funds rate.
    But that could shift, particularly as the new administration takes shape.
    "The appropriate path for the federal funds rate will change in response to changes to the outlook," Yellen said.
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