Fed chief Yellen says US rate rise still likely this year

Fed chief Yellen says US rate rise still likely this year

Fed chief Yellen says US rate rise still likely this year

Written by Staff Writer

25 Sep, 2015 | 7:20 am

The US remains “on track” for an interest rate rise this year, Federal Reserve chief Janet Yellen has said.

The central bank head said as long as inflation was stable and the US economy was strong enough to boost jobs, the conditions would be right for a rise.

Despite expectations of a rise this month, the Fed held rates, in part due to fears about global economic growth.

Ms Yellen, speaking at the University of Massachusetts, said US economic prospects “generally appear solid”.

Speaking a week after the Fed delayed that long-anticipated hike, she said she and other policymakers did not expect recent global economic and financial market developments to significantly affect the central bank’s policy.

Much recent inflationary weakness is due to special and likely temporary factors, such as a strong dollar and low oil prices, she said.

US rates have been held at practically zero since December 2008 as the economy recovers from the financial meltdown.

This month, nine members of the Fed’s key policymaking committee voted to hold the federal funds rate target at 0 to 0.25%.

The Fed’s long-term policy is to keep interest rates low until employment levels improve further and the main US inflation rate approaches its 2% target.

The World Bank recently warned developing countries to brace themselves for possible financial turbulence when the Fed eventually hikes rates.

The bank said it is possible that there would be sufficient disruption to capital flows into developing countries to harm economic growth and financial stability.

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