Fed Chair Yellen signals rate hikes
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US Economy robust, should continue to expand over the next few years – Fed chair
While presenting the Federal Reserve’s semiannual Monetary Policy Report to the Congress, Federal chair Janet L. Yellen said the US economy should continue to expand over the next few years allowing the central bank to keep making gradual interest rate increases to reach a neutral rate.
In what may be one for her last appearances before the Congress, Yellen depicted an economy that is robust with continued job gains and low unemployment. She hinted that these hikes could be more gradual, however as she cautioned about inflation still being low. Despite low inflation, the Fed has lifted interest rates twice this year, in March and June, bringing its benchmark rate to between 1 percent and 1.25 percent. The Fed Chair’s tenure expires in February with no hint as to who would take over. Yellen was nominated to her post by President Obama and could be serving another term should President Trump re-nominate her.
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Markets extended gains with US stocks opening higher and Dow Jones hitting a record peak in advance of Yellen’s dovish comments. Both the Dow and the S&P 500 are on track for their second straight daily gain, while the Nasdaq inched up for a fifth consecutive session. Yellen’s remarks put investors in quick buying mood and sent bond yields lower, extending a decline. The S&P 500 financials ended last among sectors ending with just a gain of 0.1 percent. Global equities extended gains in Asia post the Fed view.
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