The Fed chair said the policy-making Federal Open Market Committee continues to see the next move in interest rates as up, rather than down. “I do not expect the FOMC is going to be soon in a situation where it’s necessary to cut rates,” she said.She reiterated the Fed’s intention to raise rates gradually, allowing the economy to continue to expand at a moderate pace and the labor market to improve further.
The message that she is trying to send for policy is that tightening will be delayed for now, but the long run outlook is not changed as much as the investors thought..
Yellen was non-committal on whether the Fed would follow the lead of some other central banks and push rates below zero if the economy deteriorated significantly.Yellen spent much of her three-hour-plus testimony fending off attacks on the central bank. In a rare display of unity, lawmakers from both the Republican and Democratic parties criticized the Fed for providing subsidies to the banks by paying them higher-than-market interest rates for their reserves. “She acknowledged potential points of concern, including the deterioration in financial conditions, diminished international growth prospects and fallout from low commodity prices, but she also re-emphasized the bright spots in the economy.”
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