Fed chair Yellen calls for gradual rate hikes

AFP WASHINGTON (AFP-Jiji) — Federal Reserve Chair Janet Yellen said Wednesday that even as the U.S. economy grows stronger and employment expands, she foresees only “gradual” interest rate increases in the next few years.

Facing sometimes tough questions from legislators, Yellen presented the Fed’s required semi-annual report to Congress — possibly for the last time if U.S. President Donald Trump decides not to reappoint her for a second term at the helm of the U.S. central bank.

She cautioned that possible changes in the administration’s economic policy and spending are a “source of uncertainty” in the country’s economic outlook. Another big unknown is whether stubbornly low inflation will finally move closer to the Fed’s 2 percent target rate, from the current 1.4 percent.

Sluggish U.S. inflation and wage increases have baffled and worried economists given the very low unemployment rate, which would normally drive prices and earnings higher.

But Yellen once again expressed the view held by many U.S. central bankers that the low pace of price increases is “partly the result of a few unusual reductions in certain categories of prices,” such as cell phone service and prescription medicines.Speech

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