Investing.com - Federal Reserve (Fed) chair Janet Yellen repeated her view Tuesday that rate hikes this year would be “gradual” while warning that waiting too long would run the risk of damaging the U.S. economy and continued to insist that it was too early to evaluate the effect of possible fiscal policies to be implemented by President Donald Trump.
“As I noted on previous occasions, waiting too long to remove accommodation would be unwise, potentially requiring the FOMC to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession,” Yellen stated in her testimony to the Senate Banking Committee on Tuesday.
She stated that incoming data continued to suggest a strengthening labor market and that inflation was moving towards the Fed’s 2% target and that further changes to monetary policy would be data dependent.
She did note that changes in fiscal policy or other economic policies could affect the economic outlook.
“Of course, it is too early to know what policy changes will be put in place or how their economic effects will unfold,” Yellen said.
Following the release of the speech, EUR/USD was trading at 1.0595 from around 1.0610 ahead of the publication, GBP/USD was at 1.2479 from 1.2471 earlier, while USD/JPY changed hands at 113.93 compared to 113.57 prior to the release.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 101.06, compared to 100.92 ahead of the speech.
Meanwhile, U.S. stocks traded flat. The Dow Jones edged forward 11 points, or 0.05%, while the S&P 500 inched down 2 points, or 0.07%, and the tech-heavy NASDAQ Composite slipped 3 points, or 0.04%.
Elsewhere, in the commodities market, gold futures traded at $1,227.75 a troy ounce, compared to $1,233.00 ahead of the release, while crude oil was unchanged at $53.58.