Bonds then resumed weakening after Fed Vice Chair Stanley Fischer said Yellen’s speech was consistent with expectations for possible interest rate increases this year.
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Meanwhile, the Commerce Department reported Friday that USA gross domestic product rose 1.1% in the second quarter, below a previous estimate of 1.2%.
The Fed raised its target range for the federal funds rate by 25 basis points to 0.25-0.5 percent in December past year, the first rate hike in almost a decade.
The US central bank last raised rates in December past year and will decide again on September 20 to 21.
She failed, however, to provide any timing as to when the central bank would raise rates.
Yellen told the gathering of central bankers from around the world the USA economy was nearing the central bank’s goals of maximum employment and price stability but she maintained that future hikes should be “gradual”.
Future rate increases should be “gradual”, Yellen said according to a copy of her prepared remarks.
Yellen is the lead-off speaker Friday for an annual conference attended by members of the Fed’s board of governors in Washington, officials from the Fed’s 12 regional banks and monetary leaders from around the world.
“While they said the same thing, Fischer’s comments were delivered in a more hawkish fashion than Yellen’s”, said Ryan Larson, head of USA equity trading at RBC Global Asset Management in Chicago.
In light of the economy’s gains, the Fed chair says the case for an increase in the central bank’s key policy rate “has strengthened in recent months”. A number of observers, some economists and investors among them, believe the odds are higher for a rate increase at the December meeting or in 2017. She also reiterated that the decision on interest rates will “always depend on the degree to which incoming data continues to confirm the Fed policy committee’s outlook”.
Yellen earlier this year had said Britain’s surprise June vote to exit the European Union had been one factor causing the Fed to forestall an increase in rates.
The MSCI All-Country World index was down 0.1 percent by, after slipping to its lowest level since August 9, while the pan-European 600 fell 0.2 percent.
A U.S. interest rate hike would trigger a rise in the United States dollar.
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The Fed may also want to explore other options, including broadening the range of assets it can purchase, raising the inflation target, or targeting nominal GDP, she said.
