Federal Reserve Chair Janet Yellen said this morning that the U.S. economy is making steady progress, but the Fed remains patient in raising interest rates because too many Americans are still unemployed, wage growth remains sluggish and inflation is too low.
The Associated Press reports that in her semi-annual economic report to Congress, Yellen sought to explain how the Fed would begin raising rates from lows near zero. Its continuing use of the word “patient” means a rate hike is unlikely for at least the next two meetings, she said.
When the Fed eventually changes its language, Yellen said that will not necessarily translate to an imminent shift in monetary policy. Rather, it will indicate that the Fed can start considering rate hikes on a “meeting-by-meeting basis.”
Her remarks come at a delicate time for the Fed. After winning praise for how she handled her first year as head of the central bank, Yellen is facing a tougher challenge this year. She must navigate a transition from record-low interest rates to a period when the Fed will start raising rates while trying to keep financial markets calm and maintain economic growth.
Yellen’s testimony supports analysts’ view that a rate hike is not likely before June or even later this year. Read the full story.
