More interest-rate hikes may be on the way if inflation keeps rising and labor markets continue to tighten.
Federal Reserve Chair Janet Yellen on Tuesday delivered her first semiannual report on monetary policy since Donald Trump took the Oval Office. She said a rate increase may be on the horizon if employment and inflation continues to follow the central bank’s forecast, Bloomberg reported.
“Waiting too long to remove accommodation would be unwise, potentially requiring the FOMC to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession,” Yellen told the Senate Banking Committee on Tuesday.
She didn’t specify when these hikes may be implemented. The central bank said last year that it would most likely raise rates in 2017 in three quarter-point increments. The Fed has only raised rates twice since 2009.
With the departure of Fed Governor Daniel Tarullo, President Donald Trump will have the chance to fill three of the seven Fed Board seats. Yellen didn’t mention financial regulations Tuesday, but the president is currently pushing for reforms to the Dodd-Frank Act. [Bloomberg] — Kathryn Brenzel