Fed Chair Janet Yellen says Donald Trump's election has done nothing to change the Federal Reserve's plans for a rate increase "relatively soon".
ADVERTISEMENTJanet Yellen, the head of the US central bank, has said Donald Trump’s election as US president does not change the Federal Reserve’s plans for an interest rate hike “relatively soon” to be followed by a gradual pace of increases after that, unless there were any dramatic changes.
On Thursday, the financial markets – which are betting on an increase to half a percent in December – saw Yellen tell the Congressional Joint Economic Committee that the US economy is still heading toward the Fed’s goals: “The progress in the labour market has continued and economic activity has picked up from the modest pace seen in the first half of this year. And inflation, while still below the Committee’s 2.0 percent objective, has increased somewhat since earlier this year.”
Chair #Yellen testifies before the Joint Economic Committee of Congress pic.twitter.com/PfVvfFVpgG
— Federal Reserve (@federalreserve) November 17, 2016
Yellen said the Fed’s plans would be adjusted as and when the Trump administration goes ahead with its promised increased spending and massive tax cuts.
“When there is greater clarity about the economic policies that might be put into effect the (Federal Open Market Committee) will have to factor those assessments of their impact on employment and inflation and perhaps adjust our outlook,” Yellen said.
Trump has been extremely critical of Yellen accusing the Obama appointee of keeping interest rates artificially low to help Democratic candidate Hillary Clinton.
Yellen also pledged to serve out her full four-year term as Fed chair to the end of 2018.
She also warned against any move by Trump to “turn back the clock” on banking regulations saying that could make a repeat of the recent financial crisis more likely.
On the timetable for rate increases Erik Wytenus, global investment specialist at JP Morgan Private Bank said: “The Fed though is sensitive to the strength of the dollar and they don’t want to hike too far too quickly.”
