Fed to continue raising interest rate, says Yellen
Staff Writer |
Federal Reserve Chair Janet Yellen told a congressional committee Wednesday that the central bank plans to keep raising its benchmark interest rate and to reduce its investment holdings.
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Yellen appeared before the U.S. House Committee on Financial Services to give her semiannual monetary policy report.
The report was upbeat, noting the economy added 180,000 jobs per month during the first half of this year - nearly the same pace as last year's first half.
Also, the unemployment rate dropped to a pre-recessions level of 4.4 percent in June, from a high of 10 percent in 2010.
"It is also encouraging that jobless rates have continued to decline for most major demographic groups, including for African Americans and Hispanics," she said in prepared remarks.
The inflation-adjusted gross domestic product is estimated to have increased at an annual rate of 1.5 percent in the first quarter, and she said "more-recent indicators suggest that growth rebounded in the second quarter."
Overall consumer prices, as measured by the price index, increased 1.4 percent over 12 months through May, up from about 1 percent a year ago but a little lower than earlier this year.
The United States is benefiting from other countries' stronger growth.
Looking ahead, Yellen expects a strong economy.
Yellen said she and her colleagues on the Federal Open Market Committee "expect that, with further gradual adjustments in the stance of monetary policy, the economy will continue to expand at a moderate pace over the next couple of years, with the job market strengthening somewhat further and inflation rising to 2 percent."
She also expects further gains in U.S. exports.
"Favorable financial conditions, coupled with the prospect of continued gains in domestic and foreign spending and the ongoing recovery in drilling activity, should continue to support business investment," Yellen said. ■