Yellen says Fed close to achieving its economic goals

The rate-setting US Federal Reserve tightened monetary policy in December.

The rest of this week will feature more commentary from Madame Chair Yellen along with a number of her colleagues. But those rules can not be mechanically implemented because they do not take into account the lack of flexibility the Fed has in dealing with shocks when rates are low, nor many other important factors, she said. “The unemployment rate is less than 5 percent, roughly back to where it was before the recession”.

She’s determined that she and the Fed remain independent. While some Fed members have predicted three interest rate hikes in 2017, others say the central bank should hike rates more gradually. “The risks are for more Fed rate hikes than now expected”. The most recent figures propose a four-year extend of verifiably low expansion is completion in the midst of firming expenses for vitality, therapeutic care, lodging and different administrations. If the Fed does raise rates early and the US economy looks stable, unemployment doesn’t rise and equity markets don’t collapse then there could be a further two, or even three, rises in H2, but the uncertainty around the Trump presidency makes this far from a sure thing.

The FED Chairperson also mentioned that the economy is near its maximum employment level and the inflation is also on its right track. The Fed cut interest rates to near zero at the end of 2008 and kept it there for seven years.

Before delivering her remarks at SIEPR, Janet Yellen met with a group of Stanford students.

Trump has promised to support economic policy reforms that boost economic growth, but in a cautionary note, Yellen said, “I think that allowing the economy to run markedly and persistently “hot” would be risky and unwise”. While Fed officials have indicated a more aggressive rate-hiking schedule, traders believe there will be at most two moves this year – one in June and another in November or December.

Yellen’s comments were not seen as a departure from the Fed’s previous tone but they highlighted strong US fundamentals which support a strong dollar, high yields and stocks.

Meanwhile, the 30-share benchmark Sensex traded 0.20 percent higher at 27,310.88, while the 50-share benchmark Nifty futures traded 0.08 percent or 7.30 points up at 8,424.45 by 08:40 GMT.