Federal Reserve Chairwoman Janet Yellen said Thursday she doesn’t see the U.S. economy at risk of overheating and doesn’t expect growth to pick up much soon, comments suggesting the central bank is sticking to its plan of raising interest rates cautiously and gradually in the months ahead.
Ms. Yellen’s remarks, prepared for delivery at Stanford University, offered a counterpoint to many investors who think the incoming Trump administration’s plans for tax cuts and more government spending will boost growth, possibly fueling faster inflation and steeper Fed rate increases. Instead, she struck a steady-as-she-goes tone in her remarks.
Speaking on the eve of Donald Trump’s inauguration as the 45th U.S. president, she said the economy remains constrained by multiple long-term forces.
“Economic growth more broadly seems unlikely to pick up markedly in the near term given the ongoing restraint from weak foreign demand,” rising interest rates, an aging population and other factors, she said.
Still, she said, the Fed doesn’t want to wait too long to raise rates and let inflation get out of control. So, it will likely be “prudent to adjust the stance of monetary policy gradually over time,” she said, repeating the language she and other Fed officials have used recently to describe their expected pace of rate increases.