In her speech, Yellen said that the economy has recovered “substantially” since the Great Recession of 2007-2009, and she expressed confidence that it will continue growing at a pace strong enough in coming months to further boost the labour market. That and a large number of people working only part time represent continuing weakness that has prevented the labor market from reaching full employment which, along with stable prices, is the Fed’s dual mandate.
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“I now judge that US economic growth is likely to be sufficient over the next year or two to result in further improvement in the labor market”, she said in both her testimony and speech.
Her remarks were bolstered by a new Federal Reserve report on Wednesday that said the US economy grew at a modest pace this fall, lifted by higher consumer spending and more home sales and construction.
Moreover, she warned, after having locked the rate near zero for seven years, waiting too long could pose big risks to the economy and financial markets. Doing so would, in turn, raise the risk of upsetting financial markets and pushing the economy into recession. She cautioned that bad economic reports could still delay a rate increase. In a question and answer session with lawmakers, she said it was a “live option”.
Yellen, the Federal Reserve chairman, said Wednesday that economic conditions were ripe for the Fed to start raising its benchmark interest rate this month, a move that appears all but inevitable.
Some will say the Fed’s easy policies have actually gotten in the way of economic progress, while others will argue the Fed should do more to support the current recovery. The final employment report before the December meeting is scheduled for release Friday in Washington.
Infosys fell 0.36 per cent, while TCS was down 0.51 per cent. Most Indian IT companies have 10-30 per cent of their workforce based in Chennai, the capital of Tamil Nadu.
Yellen emphasized that policymakers will receive a range of data on the labor market, inflation and economic activity between now and the December meeting that will influence their decision. Yellen signaled confidence that price pressures may be moving up, referencing core inflation rather than the headline index the Fed prefers.
The two main factors holding the US economy back are the weak global economy, especially China, and the strong USA dollar, which has been making American exports very expensive overseas. And the Japanese yen eased from near 123.00 yen per USA dollar to JPY123.64 and was trading near JPY123.19 in late U.S. trade.
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While the vast majority of economists and stock market watchers now anticipate the Fed will raise rates from about 0% to 0.25% in December, there is a lot of uncertainty about what comes next.
