Federal Reserve Chairwoman Janet Yellen on Wednesday said there is “no fixed timetable” for raising U.S. interest rates as the economy continues its recovery.
Still, she made clear that rate increases are on the way, particularly since strong labor-market gains could push inflation above the central bank’s 2% target. “We expect to see solid job growth continue, but we do need, if things continue on their current course, to gradually remove the accommodation that is there.”
Speaking before the House Financial Services Committee, the Fed chief said the labor market continues its recent growth trend, with employers adding about 180,000 new jobs a month.
She also said she had been “pleasantly surprised” that the unemployment rate has held relatively steady at 4.9% for most of the year. That is a sign more workers are coming off the sidelines, she said. That has helped African-American workers in particular, she said, since minority groups tend to be among the last to recover from recessions.
Ms. Yellen warned, however, that continued job gains might do more harm than good in the future. If the unemployment rate drops much further, it could push inflation above 2%, causing the Fed to raise interest rates more rapidly than it would like to, which could tip the economy into another recession.