Investing.com – Federal Reserve Chair Janet Yellen said on Wednesday, the U.S. economy will expand at moderate pace over the next few years, warranting further increases in interest rates.
Fed chair Yellen said in a press conference on Wednesday, that the economy will expand at a “moderate pace” over the next few years, making it appropriate to gradually raise interest rates.
Yellen acknowledged that the recent dip in consumer prices has dragged near-term inflation below the central bank’s 2% target, but said that the slowdown in inflation resulted from a “one-off reduction" in certain categories of prices.
“Employment is near its maximum level and the committee expects inflation to move and stabilise around 2% over the next couple of years” Yellen said.
Yellen reiterated that the US central bank would continue to provide accommodative monetary policy to support the economy but warned against a prolonged period of lower rates in order to avoid a situation which forces the fed to raise rates rapidly.
Yellen steered clear of suggesting a start date for the fed's plan to trim its balance sheet, saying that "it [balance sheet reduction] could go into effect soon".