Fed Chairwoman Janet Yellen tells Congress the economy is making ‘very good progress’ amid some of the best government data in decades on housing, jobless claims and inflation
Federal Reserve Chairwoman Janet Yellen, testifying before the Joint Economic Committee on Thursday, said she intends to serve her full term as chair through 2018 and that the central bank is on track to raise interest rates despite post-election uncertainties.
The U.S. dollar steamed to a level not seen since 2003 and yields on the 10-year Treasury note reached a high for the year Thursday, as Federal Reserve Chairwoman Janet Yellen confirmed investors’ view that the U.S. economy is strong enough to withstand an interest-rate rise soon.
Ms. Yellen told lawmakers in testimony Thursday that the Fed could move “relatively soon,” after the government released a grab bag of economic data all pointing to a stronger economy: an improving housing market, rising consumer prices and a more robust labor market.
“At this stage, I do think that the economy is making very good progress toward our goals, and that the judgment the [Fed policy] committee reached in November still pertains,” she told Congress’s Joint Economic Committee.
Her comments bolstered expectations that the Fed will lift its benchmark federal-funds rate at its next meeting on Dec. 13-14.
Ms. Yellen said the results of the U.S. presidential election hadn’t altered the central bank’s assessment, following its meeting earlier this month, that the case for a rate increase had grown. And Thursday’s data suggest President-elect Donald Trump is poised to take office in January at the helm of an economy that is gathering pace.
Federal Reserve Chairwoman Janet Yellen told Congress’s Joint Economic Committee that it is critical the central bank be separate from the political process. The comments come after a contentious election campaign in which the Fed’s policies were criticized by President-elect Donald Trump. Photo: AP
U.S. consumer prices rose in October from a year earlier at the fastest rate in two years, while the number of Americans filing new claims for unemployment insurance fell last week to its lowest level since 1973, the Labor Department reported Thursday. Housing starts were at their strongest pace since 2007, and permits for new construction rose in October.
Ms. Yellen warned that holding off on a rate increase for too long could force the Fed to raise rates relatively abruptly in the future to keep the economy from overheating. But she said the near-term risk of “falling behind the curve” soon is limited, and reiterated that the bank expects to raise rates gradually over the next few years.
Ms. Yellen said it isn’t clear whether Mr. Trump’s proposals for tax cuts and increased spending, if enacted by Congress, could alter that path in the future.
Since last week, investors have been pouring money into the dollar and financial shares, and pulling money out of government bonds, with many expecting Mr. Trump’s election would mean a more expansive fiscal policy, stronger inflation and ultimately higher U.S. interest rates.
The improving economic news and Ms. Yellen’s comments solidified that view, investors said. The numbers “were quite striking and suggest solid growth and inflation outlooks with very low recession fear,” said Mike Lorizio, a senior fixed-income trader at Manulife Asset Management.
The ICE Dollar Index, which measures the U.S. currency against six others, reached its highest level in more than 13 years on Thursday and is up 2.9% since the election.
Write to Kate Davidson at email@example.com