WASHINGTON—Federal Reserve Chair Janet Yellen told Congress on Thursday, Dec. 3, that economic conditions appear to be improving enough for policymakers to raise interest rates when they meet in two weeks—as long as there are no major shocks that undermine confidence.
Yellen said that even after the first rate hike, the Fed expects future rate increases will be at a gradual pace that will keep borrowing costs low for consumers and businesses.
In testimony before the Joint Economic Committee, Yellen warned that waiting an extended period of time to start raising rates would carry risks.
“Were the FOMC to delay the start ... for too long,” she said, “we would likely end up having to tighten policy relatively abruptly to keep the economy from overshooting” the Fed’s goals for unemployment and inflation.
“Such an abrupt tightening would risk disrupting financial markets and perhaps even inadvertently push the economy into a recession,” Yellen said.
