Waiting too long to raise interest rates would be “unwise” as economic growth continues and inflation rises, Fed Chair Janet Yellen told Congress on Tuesday.
Repeating caution that she and other central bank officials have issued in recent months, Yellen said that even though the Fed expects to hike gradually and to keep policy accommodative, getting rates back to normal levels is important and hikes will be considered ahead.
Market reaction was prompt, with government bond yields jumping on the news.
The Fed kept its target overnight lending rate near zero for seven years and raised just twice since — in December 2015 and again a year later. The funds rate is currently targeted in the 0.5 percent to 0.75 percent range.
Traders do not expect the policymaking Federal Open Market Committee to hike at the March session. However, Yellen did say that increases would be evaluated “at upcoming meetings.”
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.