She, however, failed to disclose the timing of the potential rate hike.
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U.S. Federal Reserve Chair Janet Yellen speaks during a news conference following the two-day Federal Open Market Committee (FOMC) policy meeting in Washington, DC, U.S. on March 16, 2016.
USA economic growth in the second quarter was a bit more sluggish than initially thought as businesses aggressively ran down stocks of unsold goods, offsetting a spurt in consumer spending.
Yellen said the Fed anticipates “inflation rising to 2 percent over the next few years”.
Yellen lifted the cloud of uncertainty over the Fed’s monetary policy direction in a speech at a central banking symposium in Jackson Hole, Wyoming, saying: “The case for an increase in the federal funds rate has strengthened in recent months”.
Federal-funds futures, which are used to place bets on central-bank policy, showed that investors now see a 30% chance of rate increase at the Fed’s September meeting, up from 21% Thursday, according to CME Group.
Yellen stressed as usual that policy moves were dependent on economic data.
Noting strong United States job growth, Yellen said gradual increases in the Fed’s benchmark rate in the coming years should be expected.
Federal Reserve Chairwoman Janet Yellen indicated on Friday that the central bank may raise interest rates prior to its December meeting as the USA economy is showing growing signs of strength.
London equities flatlined as official data confirmed that the British economy grew by 0.6 percent in the second quarter, compared with the previous three months. The sluggish first half is a stark reminder of the economy’s inability to achieve strong, sustainable growth since the recession ended seven years ago.
Since exiting the recession in the summer of 2009, the USA economy has been growing sluggishly, making it the slowest recovery since World War II. Growth hasn’t topped 3% for a full year since 2005. But about 71 percent of 62 economists surveyed by the Wall Street Journal this month believed that the Fed will wait until December to raise rates. The rate had been kept near zero since the depths of the 2008 financial crisis.
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By contrast, the Bank of England cut rates in the United Kingdom from 0.5 per cent to 0.25 per cent this month, and has not raised rates since 2007. Since then, slower growth overseas and market shocks caused by the Brexit vote in the United Kingdom has made the Fed extremely cautious.
