But in a speech in San Francisco on Wednesday, she said she can\u2019t say when the next interest rate will occur or how high rates will rise. She said that will depend on how the economy performs in the coming months. Last month, the Fed, in its compilation of rate-setting members\u2019 projections, indicated it aimed for three quarter-point increases in 2017.
The Federal Reserve voted unanimously Wed. to raise interest rates one quarter of one percent. Fed Chair Janet Yellen cited falling unemployment…
Yellen said Fed officials, who boosted short-term rates for a second time last month, expect to raise rates \u201ca few times a year\u201d until they have pushed the Fed\u2019s benchmark rate close to 3 percent by the end of 2019. The rate now stands in a range of 0.5 percent to 0.75 percent. The first increase came in December 2015, after the central bank lowered the benchmark to near-zero to combat the economic downturn.
The 3 percent level for the Fed\u2019s target for the federal funds rate, the interest that banks charge each other, is the point that the Fed currently believes is the so-called neutral rate — the level where the Fed\u2019s interest rate policies are not spurring growth or holding it back.
\u201cRight now our foot is still pressing on the gas pedal, though, as I noted, we have eased back a bit,\u201d Yellen said. \u201cOur foot remains on the pedal in part because we want to make sure the economic expansion remains strong enough to withstand an expected shock, given that we don\u2019t have much room to cut interest rates.\u201d
Currently, Yellen said inflation is still running below the Fed\u2019s 2 percent objective, by its preferred measure of prices, and that some measures show that even though unemployment is below 5 percent, there could still be room to make further progress on jobs.
\u201cFor instance, wage growth has only recently begun to pick up and remains fairly low,\u201d Yellen said.
She said that, as the economy gets closer to the Fed\u2019s goals on employment and inflation, it will make sense to \u201cgradually reduce\u201d the level of support the Fed is providing by raising interest rates.
\u201cWaiting too long to begin moving toward the neutral rate could risk a nasty surprise down the road — either too much inflation, financial instability or both,\u201d Yellen said in her speech to the Commonwealth Club of San Francisco.
During her appearance, Yellen made no mention of the incoming Trump administration. President-election Donald Trump was critical of Yellen during the campaign, accusing the Fed of being political and keeping interest rates low to help Democrats.
Yellen has denied this charge. She has said she intends to remain as Fed chair until her term ends in February 2018.
Yellen was asked how the Fed safeguards its political independence while at the same time strengthening policy coordination with the executive branch.
One long tradition dating back decades, she said, is the Fed chair\u2019s regular meetings with the administration\u2019s Treasury secretary.
\u201cDuring my time, I have had virtually a weekly breakfast or lunch with Jack Lew,\u201d Yellen said, referring to the current Treasury secretary.
She said the meetings are used for exchanging views on the economy, but she said she has never felt pressure from the administration to follow a particular course on interest rates.
\u201cWe share a common interest in the success of the U. S. economy, and the administrations, at least the ones I have experience with, respect the independence of the Fed,\u201d Yellen said.<\/p>\n

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Sentiment rank: 3.5<\/div>\n

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