Federal Reserve Chair Janet Yellen sought to prepare investors for a change in the Fed’s pledge to be “patient” on raising interest rates, saying it would provide flexibility to tighten when conditions are ripe.
A shift in guidance would signal the economy has improved to the point where an increase “could be warranted at any meeting,” while not necessarily committing policy makers to a rate increase on a specific timetable, Yellen said in testimony Tuesday before the Senate Banking Committee.
Yellen struck an upbeat note in her assessment of the economy, saying the job market is improving and household finances are stronger. Stocks and Treasuries initially fell, then rallied as investors focused on her comments that inflation and wage growth remain too low.
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