WPRO News and The Associated Press
Federal Reserve Chair Janet Yellen says she expects the Fed to begin raising interest rates later this year – but only if the job market improves and the Fed is confident inflation will climb closer toward its target rate.
In a speech to the Greater Providence Chamber of Commerce in Providence Friday, Yellen described the U.S. economy as “well positioned for continued growth.” At the same time, she said the economy is still facing a number of headwinds that could stall growth.
“If the economy continues to improve as I expect, I think it will be appropriate at some point this year, to take the initial step to raise the Federal funds rate target and begin the process of normalizing monetary policy.”
Yellen also signaled a shift in the Federal Reserve’s approach to setting interest rates, from a reactive to a more active stance.
“Because of the substantial lags in the effects of monetary policy on the economy, we must make policy in a forward looking manner. Delaying action to tighten monetary policy until employment and inflation are already back to our objectives would risk overheating the economy,” Yellen told about 750 people in the Rhode Island Convention Center.
