Fed on Course to Raise Rates at Up­com­ing Meet: Yellen

Leav­ing rates un­changed now may lead it to hik­ing rates quickly in fu­ture, which could cause a re­ces­sion, says Fed chief

The Economic Times - - Companies: Pursuit Of Profit -

New York: 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 pol­i­cy­mak­ing­com­mit­tee­be­hindthe­curve­and even­tu­ally lead it to hike rates quickly, which she said could cause a re­ces­sion.

“Wait­ing too long to re­move ac­com­mo­da­tion would be un­wise,” Yellen said be- fore the US Se­nate Banking Com­mit­tee, cit­ing the cen­tral bank’s ex­pec­ta­tions the job mar­ket will tighten fur­ther and that in­fla­tion would rise to 2%. “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 sig­naled in De­cem­ber. Nor did she give in­di­ca­tions whether the first rate hike of the year might come at its next meet­ing in March.

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