WASHINGTON (Sputnik) — The US Federal Reserve will increase the interest rate later this year, a move to be followed by gradual short-term rate hikes as the labor market improves, Federal Reserve Chairperson Janet Yellen said during a speech at the University of Massachusetts.
“It will likely be appropriate to raise the target range for the federal funds rate sometime later this year and to continue boosting short-term rates at a gradual pace thereafter as the labor market improves further and inflation moves back to our 2 percent objective,” Yellen said on Thursday.
The US economic outlook is highly uncertain, she warned, and it is conceivable that inflation could remain below the Fed’s 2 percent target.
“Some slack remains in labor markets, and the effects of this slack and the influence of lower energy prices and past dollar appreciation have been significant factors keeping inflation below our goal,” Yellen added.
On September 17, Yellen said an interest rate hike could take place in October because of expected improvements in economic conditions after the Fed kept the rate unchanged at the 0 to 0.25 percent range.
The Federal Reserve is the central bank of the United States that is responsible for managing national monetary policy, setting interest rates and regulating banks.
