US Federal Reserve Chairwoman Janet Yellen said on Thursday that the central bank could begin raising rates “relatively soon”, despite post-election uncertainties. Yellen also pledged to serve her full term as chair through 2018.
The Fed chair pointed to robust recent economic data as justification of a rate hike, stressing that economic growth had accelerated over the second half of the year as wages continue to rise while the US nears full employment.
Chair #Yellen testifies before the Joint Economic Committee of Congress pic.twitter.com/PfVvfFVpgG
— Federal Reserve (@federalreserve) November 17, 2016
“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,” Yellen told Congress’s Joint Economic Committee.
Her comments have increased expectations that the Fed will increase its benchmark federal-funds rate at its next meeting on December 13-14.
Yellen also commented on the new administration’s plans for significant tax cuts and a boost in government spending. She said that the central bank would change its outlook as necessary.
“Markets are anticipating … a fiscal package that involves a net expansionary stance of policy and that in a context of an economy that is operating reasonably close to maximum employment with inflation heading back to 2 percent,” Yellen was quoted by Reuters as saying, suggesting new programs focus on “policies that would improve … long run growth and productivity.”
“The evidence we have seen since we met in November is consistent with our expectation of strengthening growth and improving labor markets and inflation moving up,” Yellen added. “The risk of falling behind the curve in the near future appears limited.”
“When there is greater clarity about the economic policies that might be put into effect the (Federal Open Market Committee) will have to factor those assessments of their impact on employment and inflation and perhaps adjust our outlook.”
The yield on the benchmark 10-year Treasury note reached as high as 2.337% on Thursday, the highest level so far this year.