Currently, the Fed projects it will raise rates twice this year, though Fed officials have only been talking about one increase in recent weeks.
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She also noted that while inflation is still running below the Fed’s 2 percent target, it’s being depressed mainly by temporary factors.
Yellen stressed as usual that policy moves were dependent on economic data.
The greenback fell before Fischer’s remarks who said an interest-rate increase is possible in September as traders focused on Yellen’s comments that the central bank will take a gradual approach to tightening policy, Bloomberg reported.
“Unless there’s a huge rise in jobs in the next jobs report, [a rate hike is] still probably more likely in December than September”.
“She suggests the economy is improving, but the GDP numbers for the past three quarters are closer to 1 percent than three percent”, said Bruce Bittles, chief investment strategist at R.W. Baird.
On Thursday, several policymakers, including San Francisco Fed President John Williams and Kansas City Fed President Esther George, defended the need to raise rates, albeit gradually, to keep the US economy from overheating. “I think the evidence is the economy has strengthened”.
“It is still very early days in terms of gauging the impact of the referendum on the economy and much could still go wrong”, independent research house Oxford Economics’ lead United Kingdom economist, Andrew Goodwin, said.
In December 2015 the Fed increased interest rates a quarter percentage point after seven years of keeping rates near zero. After Yellen’s speech, data from the CME Group indicated that investors foresee only a 24 percent probability of a rate hike in September and about a 58 percent chance by December.
BOND REACTION: U.S. government bond prices rose slightly following Yellen’s speech, suggesting investors aren’t anxious about rates increasing soon.
The Fed chair on Friday defended the extraordinary tools the central bank has used to support the economy since the 2007-2009 Great Recession. Now she’s giving no time reference.
“Anything that’s not going to be straight-out dovish is going to be disappointing”, she said.
Yellen pointed to a recent rebound in employment and said the Fed expects the economy to continue expanding. The conference draws members of the Fed’s board of governors in Washington, officials from the 12 regional banks and monetary leaders from around the world.
Stocks rose in morning trading Friday following two days of declines after Federal Reserve Chair Janet Yellen gave an upbeat assessment on the USA economy.
In advance of Yellen’s speech Friday, George, Fischer and eight other Fed officials met Thursday with about 120 activists from the Campaign for Popular Democracy’s Fed Up coalition.
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“Our communities are being sacrificed for an inflation enemy that isn’t here”, said Rod Adams, a community organizer for Neighborhoods for Change in Minnesota.
