Federal Reserve Chair Janet Yellen while speaking on economic outlook on Monday said interest rate hikes are coming, but gave no clue on when.
According to Yellen, “the economy has registered considerable progress toward the Federal Reserve’s goals of maximum employment and price stability.”
The unemployment rate declined below 5 percent to 4.7 percent, household incomes are on the rise and clear signs of faster wage growth.
Although she mentioned slowdown in job creation for the past two months, but also point to increase in average hourly earnings and said Fed is monitoring the labour market closely.
However, she said that monetary policy is not on a preset course and significant shifts in the outlook for the economy would necessitate corresponding shifts in the appropriate path of policy.
Hence, “one should never attach too much significance to any single monthly report,” she said. “If the May labor report was an aberration or reflects a temporary slowdown resulting from the weakness in economic activity at the start of the year, then job growth should pick up and support further gains in income.”
Another issue is global risks, Yellen said the uncertainty surrounding both China’s growth rate and the U.K. referendum on membership in the European Union are key global growth determinants that could impact rates of U.S. productivity.
The US dollar was unchanged while stocks surged and treasury yields edged lower during the discussion.