- Janet Yellen, Fed Chairwoman
While addressing Congress, Fed Chair Janet Yellen said that the central bank is unlikely to reverse its plan to hike interest rates further this year. Yellen stressed that even after the December increase, the stance of monetary policy remains accommodative. The actual path of the federal funds rate will depend on incoming economic data, and policy makers regularly reassess what level of the federal funds rate is consistent with reaching and maintaining maximum employment and 2% inflation.
Yellen welcomed the progress the US economy made toward the central bank's objective of maximum employment. However, Yellen highlighted that while labour market conditions improved substantially, there was still room for further sustainable improvement. With regards to inflation, the Fed Chair said even though inflation is expected to remain low in the near term, partly due to further declines in energy prices, the FOMC expects that inflation will climb to its 2% objective over the medium term. However, financial conditions in the US have recently become less supportive of growth. "These developments, if they prove persistent, could weigh on the outlook for economic activity and the labour market, although declines in longer-term interest rates and oil prices provide some offset. Foreign economic developments, in particular, pose risks to US economic growth."
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