Daily Sabah logo

Politics
Diplomacy Legislation War On Terror EU Affairs Elections News Analysis
TÜRKİYE
Istanbul Education Investigations Minorities Expat Corner Diaspora
World
Mid-East Europe Americas Asia Pacific Africa Syrian Crisis Islamophobia
Business
Automotive Economy Energy Finance Tourism Tech Defense Transportation News Analysis
Lifestyle
Health Environment Travel Food Fashion Science Religion History Feature Expat Corner
Arts
Cinema Music Events Portrait Reviews Performing Arts
Sports
Football Basketball Motorsports Tennis
Opinion
Columns Op-Ed Reader's Corner Editorial
PHOTO GALLERY
JOBS ABOUT US RSS PRIVACY CONTACT US
© Turkuvaz Haberleşme ve Yayıncılık 2023

Daily Sabah logo

عربي
  • Politics
    • Diplomacy
    • Legislation
    • War On Terror
    • EU Affairs
    • Elections
    • News Analysis
  • TÜRKİYE
    • Istanbul
    • Education
    • Investigations
    • Minorities
    • Expat Corner
    • Diaspora
  • World
    • Mid-East
    • Europe
    • Americas
    • Asia Pacific
    • Africa
    • Syrian Crisis
    • Islamophobia
  • Business
    • Automotive
    • Economy
    • Energy
    • Finance
    • Tourism
    • Tech
    • Defense
    • Transportation
    • News Analysis
  • Lifestyle
    • Health
    • Environment
    • Travel
    • Food
    • Fashion
    • Science
    • Religion
    • History
    • Feature
    • Expat Corner
  • Arts
    • Cinema
    • Music
    • Events
    • Portrait
    • Reviews
    • Performing Arts
  • Sports
    • Football
    • Basketball
    • Motorsports
    • Tennis
  • Gallery
  • Opinion
    • Columns
    • Op-Ed
    • Reader's Corner
    • Editorial
  • TV

Yellen says Fed to rate hike 'later this year'

by

WASHINGTON Jul 10, 2015 - 12:00 am GMT+3
No Image
by Jul 10, 2015 12:00 am
Federal Reserve Chair Janet Yellen said the Fed is on track to start raising interest rates later this year but expressed multiple concerns over headwinds that are still holding back the U.S. economy.

She described the outlook for the economy and inflation as "highly uncertain," amid lingering weakness in the labor market and new potential threats overseas.

Yellen, speaking on the economy for the first time since the Fed's June meeting, saw reasons for encouragement. Consumer spending appears to be picking up, and employment is likely to keep expanding, she said.

"Based on my outlook, I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate," Yellen said, referring to the Fed's key short-term interest rate, which has been at a record low near zero since December 2008.

But she also outlined a host of concerns, from weak wage growth to a low labor participation rate to "disappointing" productivity. She reiterated that inflation is still well below the Fed's 2 percent target. Yellen also noted that cautious business owners "have not substantially increased their capital expenditures."

Yellen, whose comments came in a speech in Cleveland, said even when the Fed does start raising rates, the increases will be gradual.

New potential risks have emerged since the Fed's June 16-17 meeting, including the on-going Greek debt crisis and a sharp plunge in China's stock market over the past month.

Yellen noted in her speech that the "situation in Greece remains unresolved." But she also said that the economic recovery in the 18-nation Eurozone "appears to have gained a firmer footing." She did not mention developments in China at all, nor was she asked about Greece or China during a question-and-answer period following the speech.

The recent developments have prompted many economists to push back their projections for the Fed's first rate hike from September to December. The Fed's next meeting takes place on July 28-29, but there is no expectation the Fed will make a move then.

"We want to see further improvements in the labor market and with inflation running as low as it is, we want to feel reasonably confident that inflation will move up" in the next two to three years, Yellen said in outlining the landscape that will determine the timing of the first rate increase.

But she added that it would be wrong to "over-emphasize" the Fed's initial move.

What will matter more to the economy is not when the first rate hike happens but how quickly the Fed moves rates higher afterward, she said. Because rates are likely to climb gradually, interest rates will stay at low levels for some time.

Asked what she saw as the biggest threats facing the U.S. economy, Yellen said her major focus was to learn from the mistakes made in the lead-up to the 2008 financial crisis.

"This was a devastating event that took an enormous toll on our economy," she said.

She said the Federal Reserve needs to be "much more vigilant and much better prepared" in an effort to make sure that the financial system does not see a repeat of the 2008 crisis.

Yellen is scheduled to deliver the Fed's mid-year economic report to Congress next week.
  • shortlink copied
  • Last Update: Jul 10, 2015 10:38 pm
    RELATED TOPICS
    fight-against-terrorism DEUTSCHE-BANK US-LIBYA-RELATIONS
    KEYWORDS
    homepage
    The Daily Sabah Newsletter
    Keep up to date with what’s happening in Turkey, it’s region and the world.
    You can unsubscribe at any time. By signing up you are agreeing to our Terms of Use and Privacy Policy. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
    No Image
    Americans head to polls to vote in stormy midterms
    PHOTOGALLERY
    • POLITICS
    • Diplomacy
    • Legislation
    • War On Terror
    • EU Affairs
    • News Analysis
    • TÜRKİYE
    • Istanbul
    • Education
    • Investigations
    • Minorities
    • Diaspora
    • World
    • Mid-East
    • Europe
    • Americas
    • Asia Pacific
    • Africa
    • Syrian Crisis
    • İslamophobia
    • Business
    • Automotive
    • Economy
    • Energy
    • Finance
    • Tourism
    • Tech
    • Defense
    • Transportation
    • News Analysis
    • Lifestyle
    • Health
    • Environment
    • Travel
    • Food
    • Fashion
    • Science
    • Religion
    • History
    • Feature
    • Expat Corner
    • Arts
    • Cinema
    • Music
    • Events
    • Portrait
    • Performing Arts
    • Reviews
    • Sports
    • Football
    • Basketball
    • Motorsports
    • Tennis
    • Opinion
    • Columns
    • Op-Ed
    • Reader's Corner
    • Editorial
    • Photo gallery
    • Jobs
    • privacy
    • about us
    • contact us
    • RSS
    © Turkuvaz Haberleşme ve Yayıncılık 2021