The Federal Reserve does not have a “fixed timetable” for removing the current accommodative stance, central bank Chair Janet Yellen told Congress on Wednesday.
Still, many of her Fed colleagues indicated in their recent projections that it would be appropriate to remove some of that accommodation this year if no significant new risks arise, she added.
Stocks declined slightly while Yellen was testifying.
Yellen’s testimony follows the Federal Reserve’s decision last week to hold steady on the federal funds rate at 0.25 percent to 0.5 percent.
Eventually, she said, continued job creation at the pace it has been running would cause the economy to overheat. If this happens, the Fed could be forced to raise rates faster than policymakers would like to, she added.
Yellen was speaking as part of her semiannual testimony before the House Financial Services Committee about financial regulation. Investors have been watching Yellen’s comments closely for clues about any potential changes to the timing of the next rate hike. The Fed raised rates last December for the first time in nearly a decade but has held firm since then.
At her news conference following last weeks decision, Yellen said she “would expect to see (a rate increase this year) if we continue on the current course of labor market improvement, and there are no major risks that develop and we stay on the current course.”
In the closely watched dot plot, Fed members forecast a median federal funds rate of 0.6 percent, indicating another hike would be in the cards before year end.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.