Federal Reserve Chair Janet Yellen speech to Economic Club of Washington, in Washington.
Making no specific mention of the mid-month December FOMC meeting, Janet Yellen is looking forward to rate normalization. Speaking to an economics group in Washington, Yellen said economic growth is strong enough to lead toward maximum employment and that risks tied to global factors have eased since the volatility of August. On the inflation side, she notes a welcome but still early increase underway in wages and believes that deflationary effects of low oil and low import prices will diminish next year. Still, she concedes that the Fed has yet to make significant progress on inflation. She also sees some slack still available in the labor market and finds risks to growth and employment "very close" to balanced. And, in a reminder that there are more data to come including Friday's employment report, she notes that additional data yet to be released will bear on the outcome of this month's FOMC.
In questions and answers, Yellen repeated that policy makers do not have a mechanical plan for raising rates and that the path is not predetermined and will be based on the unfolding of economic data. Though she does encourage a consensus, she said the decision to lift off will not require unanimous assent. These latter comments underscore how delicate the decision still is, that arguments on both sides are strong. Markets are little changed following her comments. Tomorrow, Yellen testifies before the Joint Economic Committee in Washington.
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