The election of Donald Trump as U.S. president has done nothing to change the Federal Reserve’s plans for a rate increase “relatively soon,” Fed Chair Janet Yellen said today in congressional testimony that included a pledge to serve out her term.
As Reuters reports, Yellen said the U.S. central bank would change its outlook as necessary as the new administration rolls out plans for perhaps hundreds of billions of dollars in tax cuts and additional government spending. She also suggested the new government keep in mind that the United States is near full employment and inflation may be rising.
“Markets are anticipating … a fiscal package that involves a net expansionary stance of policy and that in a context of an economy that is operating reasonably close to maximum employment with inflation heading back to 2 percent,” Yellen said, suggesting new programs focus on “policies that would improve … long run growth and productivity.”
There had been some uncertainty about how Yellen would interact with a new president who at turns during the campaign spoke favorably of the Fed’s low rate policies, and yet also accused the Fed of acting politically to help Democratic nominee Hillary Clinton.
