FXStreet (Córdoba) – Federal Reserve Chair Janet Yellen said on Wednesday that delaying the lift-off too long could lead to abrupt tightening at a later date to keep the economy from significantly overshooting both of our goals (employment and inflation).
In prepared remarks at the Economic Club of Washington she added that labor market gains bolster her confidence in a return of inflation to 2 percent as the disinflationary effects of declines in energy and import prices wane.
The Fed will hold its policy meeting on Dec 15-16 and it has reiterated it would raise rates when it had become reasonably confident inflation will move up toward 2% and when it sees further improvement in the job market. According to today’s remarks, both objectives seem nearly achieved.
“On balance, economic and financial information received since our October meeting has been consistent with our expectations of continued improvement in the labor market,” Yellen said. “Continuing improvement in the labor market helps strengthen confidence that inflation will move back to our 2 percent objective over the medium term.”
The economy has come a long way toward the FOMC’s objectives of maximum employment and price stability, she said. “When the Committee begins to normalize the stance of policy, doing so will be a testament, also, to how far our economy has come in recovering from the effects of the financial crisis and the Great Recession. In that sense, it is a day that I expect we all are looking forward to”.
The Labor Department will release November’s nonfarm payrolls report on Friday, which will be key for the final decision. “Between today and the next [FOMC] meeting, we will receive additional data that bear on the economic outlook,” Yellen said.
(Market News Provided by FXstreet)