Yellen says she isn’t going anywhere when Trump takes office

“It is fully my intention to serve out my term”, she said.

RATE HORIZON: In remarks to Congress, Yellen suggested the US central bank is on track to raise interest rates when policymakers hold their final meeting of the year in December.

She added, “We will be watching the decisions that Congress makes and updating our economic outlook as the policy outlook becomes clearer”. As a result, massive government outlays would drive up inflation as employers bid up wages to attract a limited pool of workers.

At this point, Ms. Yellen said she saw only a “limited” risk that the Fed would end up behind the curve and lose control of an inflation rate that has been frustratingly low since the financial crisis and recession of Y’s 2007 to 2009.

Yellen added. “The long-run deficit probably needs to be kept in mind”. Involuntary part-time employment, she noted, remains elevated.

“No I can not”, she said.

At 4.9 percent, the USA unemployment rate is still slightly above most Fed officials’ estimate for the lowest sustainable level of joblessness, she said.

The US dollar index rose to its highest level since 2003 and equity markets gained in Europe and the US after Yellen’s testimony while US treasuries fell, pushing yields on the 10-year note five basis points higher to 2.27 percent.

“With the federal funds rate now only somewhat below estimates of the neutral rate, the stance of monetary policy is likely moderately accommodative, which is appropriate to foster further progress toward the FOMC’s objectives”, she said. Other Fed officials in recent days have said a major change in fiscal policy could force them to shift gears if, for example, inflation begins to accelerate.

“I think the market has gotten a little bit ahead of itself – there is an expectation that inflation is coming, that rate hikes are coming, but I’m not completely convinced of that”.

President-elect Donald Trump has pledged a $1 trillion infrastructure spending program to help jump-start an economy that he said during the campaign was in awful shape.

Her advice was to “choose policies that would improve that long-run growth and productivity outlook” by increasing the economy’s productive capacity. The Dallas-based hospital chain tumbled after Trump’s surprise election November 8, on fears that the hospital company and other providers would be hurt if Trump makes good on his vow to repeal and replace the Affordable Care Act.

Meanwhile, Yellen said putting off a rate increase could lead to more abrupt hikes down the road.

The Federal Open Market Committee is set to start its next two-day policy meeting on December 13.

Yellen said the Fed could raise USA interest rates “relatively soon” if economic data keeps pointing to an improving labour market and rising inflation. Fed board members judged at their meeting this month that the case for a rate hike had strengthened, she said.

He said it was unlikely that Yellen would be re-appointed in 2018.

“Moreover, holding the federal funds rate at its current level for too long could also encourage excessive risk-taking and ultimately undermine financial stability”, she said.

The Fed chief praised Dodd-Frank for making banks safer by requiring them to maintain more capital and to back away from risky activities. “And sometimes central banks need to do things that are not immediately popular for the health of the economy”. Trump has called for repealing the legislation. In September, Trump told CNBC that the chairwoman was keeping interest rates low in an effort to boost the stock market and burnish the appearance of Obama’s economic record.

Additionally, Yellen was asked about the importance of the political independence of the Fed.