Federal Reserve Chair Janet Yellen on Tuesday told a congressional committee that the US central bank is making all efforts to consider increase in interest rates.
Yellen told the congressional panel that the bank is making subtle plans “on a meeting-by-meeting basis” for its first rate hike since 2006.
“If economic conditions continue to improve, as the committee anticipates, the committee will at some point begin considering an increase in the target range for the federal funds rate on a meeting-by-meeting basis,” Yellen said.
Informing the Senate Banking Committee about the bank’s rate hike plans, Yellen said that the rate-setting policy committee of the Federal Bank is expected to proceed over the issue in the coming months.
The Fed has been condemned for incorporating forward guidance in order to influence the market behavior, while simultaneously insisting upon the notion that any decision on rate hike remains dependent on economic data.
“The committee will change its forward guidance. However, it is important to emphasize that a modification of the forward guidance should not be read as indicating that the committee will necessarily increase the target range in a couple of meetings,” she told the congressional committee.
Meanwhile, the US dollar touched a session high as soon as Yellen commenced her testimony.
According to Yellen, the Fed’s policy-setting committee will first set an aim of dropping the word “patient” from its statement that has been used since December for describing the Fed’s approach on the preferable timing of an initial increase in rate of interests.
Yellen’s mention of forward guidance has been a part of the prepared testimony that incorporated a broad overview of an American economy that seemed to be increasing forward with strong growth on the jobs front and a continued expansion in post-financial crisis, the conditions that are largely consistent with a increase in the interest rates expected later this year.
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