Yellen: Rates will hinge on whether turmoil persists
BUSINESS RECORD STAFF Feb 10, 2016 | 4:20 pm
1 min read time
235 wordsAll Latest News, Banking and FinanceFederal Reserve Chair Janet Yellen said the Fed still expects to raise interest rates gradually, while making it clear that continued market turmoil could throw the central bank off course from the multiple increases that policymakers have forecast for 2016, Bloomberg reported.
Eight weeks after raising interest rates for the first time in nearly a decade, Fed officials are struggling to judge whether financial market turmoil and a dimmer outlook abroad undermine their U.S. forecast and the need for additional policy tightening.
“Financial conditions in the United States have recently become less supportive of growth,” Yellen said in testimony prepared for delivery Wednesday before the House Financial Services Committee. “These developments, if they prove persistent, could weigh on the outlook for economic activity and the labor market.”
Yellen kicked off two scheduled days of testimony on Capitol Hill by also telling lawmakers that uncertainty over China’s economic prospects and exchange-rate policy had “exacerbated concerns about the outlook for global growth” and contributed to the latest drops in oil and other commodities. A potential risk for the U.S. economy is that the commodities bust may trigger stresses around the world that threaten demand for U.S. exports, she said.
Yellen kept the door open for a rate increase in March, though she didn’t explicitly refer to any tightening timeline or the Fed’s next meeting. “Of course, monetary policy is by no means on a preset course,” she said.
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