Federal Reserve Chair Janet Yellen said on Wednesday she was “looking forward” to a US interest rate increase, the first in a decade.
Policymakers are reasonable confident that the Federal Reserve will announced the interest rate increase during a meeting on December 15-16.
In her remarks to the Economic Club of Washington, Yellen expressed confidence in the U.S. economy.
Yellen also reaffirmed her view that the drag on U.S. economic growth and inflation from weakness in the global economy and falling commodity prices would moderate next year. U.S. consumer spending was “particularly solid”, she noted.
“When the Committee begins to normalize the stance of policy, doing so will be a testament … to how far our economy has come,” she said, referring to the Fed’s policy-setting committee. “In that sense, it is a day that I expect we all are looking forward to.”
Analystis believe the Fed will lift its benchmark federal funds rate this month from zero to the 0.25 percent range, followed by a rate raise in December.
The U.S. dollar strengthened on Wednesday and stocks fell on Wall Street, following Yellen’s comments.
Yellen said the timing of the first U.S. rate increase in nearly a decade was not as important as the path of subsequent rises which policymakers expect will be gradual.
“An abrupt tightening would risk disrupting financial markets and perhaps even inadvertently push the economy into recession,” she said.
Responding to a question after her speech, she said the Fed would weigh incoming data to set the pace of hikes. “This may turn out to be a very different cycle than past cycles,” she said.