“Such an abrupt tightening would risk disrupting financial markets and perhaps even inadvertently push the economy into recession, reported the British newspaper, The Guardian”.
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The Fed meanwhile is widely expected to begin raising rates after nine years in its December 15-16 policy meeting.
Solid and continuing economic growth and increasing employment had also helped move the economy closer to the FOMC’s goals, Yellen said.
Yellen, in a speech to the Economic Club of Washington, gave an upbeat assessment of the economy’s progress since the Fed’s October meeting, describing it as in line with the Fed’s expectations for the labor market and inflation.
In South Korea, the benchmark Kospi index fell 1.1% to 1,985.67 despite a revision to third quarter growth figures which showed more of an acceleration in the economy.
“Those risks are ones that we watch very carefully”, she said.
Yellen reiterated Thursday concerns about keeping rates too low for too long.
Declining issues outnumbered advancing ones on the NYSE by 2,518 to 579, for a 4.35-to-1 ratio on the downside; on the Nasdaq, 2,159 issues fell and 674 advanced for a 3.20-to-1 ratio favouring decliners. Friday’s jobs report will be the last one the Fed will see before that meeting. The lower-than-expected inflation reinforced expectations the European Central Bank will launch more stimulus measures today to bring inflation back to its target of just below 2%.
“The strong dollar, low commodity prices, and weak global demand were named by several districts as factors for constrained demand”, the report said.
When the Fed votes, Yellen said she will not be concerned if the 10 voting members of the Fed’s policy committee are not unanimous.
“To simply provide jobs for those who are newly entering the labour force probably requires under 100,000 jobs per month”, with anything above that helping “absorb” those who are unemployed, discouraged or had dropped out of the labour market, Yellen, who was speaking before Congress’ Joint Economic Committee, said in a question and answer session. She added that while the bank might have to be cautious about increasing interest rates from near zero levels, the Fed fund rates would remain accommodative even after an initial increase.
Most other regional assets also declined, as investors braced for the Federal Reserve’s first rate increase in nearly a decade. “Absent information that drastically changes the economic picture and outlook, I feel the case for liftoff is compelling”, in said in a speech in Fort Lauderdale, Florida.
In addition, Yellen argued, a congressional proposal to fund a highway bill with money from the Federal Reserve’s operating surplus account would weaken fiscal discipline.
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– CNNMoney’s Patrick Gillespie contributed to this article.
