FRB Chair Yellen: Rate Increase May Be Appropriate Relatively Soon

This morning, Federal Reserve Board (FRB) Chair Janet Yellen will state in her testimony before Congress that a rate hike “could well become appropriate relatively soon,” but as reported in the Wall Street Journal, the testimony “offers no signals about what the central bank will do at its meeting next month.”

In her prepared remarks for the Joint Economic Committee, Chair Yellen states: “Were the FOMC [Federal Open Market Committee] to delay increases in the federal-funds rate for too long, it could end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of the Committee’s longer-run policy goals,” and that “ holding the federal-funds rate at its current level for too long could also encourage excessive risk-taking and ultimately undermine financial stability.”

Reflecting back on the prior meeting at which Fed officials left rates unchanged, she states that that decision “does not reflect a lack of confidence in the economy.” The next Federal Reserve meeting is December 13-14, 2016.

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