WASHINGTON—Federal Reserve Chair Janet Yellen said Wednesday that an interest rate hike in December is a “live possibility” if the economy stays on track.
Yellen described the U.S. economy as “performing well” right now, with solid growth in domestic spending. At their meeting last week, policymakers believed that the threat of global headwinds had ebbed, Yellen said.
At its Dec. 15-16 meeting, the Fed will consider raising a key interest rate from a record low near zero if the economy continues to grow at a strong enough pace to keep adding jobs and push annual inflation toward the Fed’s 2 percent target, Yellen said.
Yellen stressed that no decision has been made yet and a move in December will depend on how the economy fares between now and then. She reiterated that when the Fed does start raising rates, it will do so gradually.
She said she understood that “there is a great deal of focus” on the timing of the Fed’s first rate hike in nearly a decade. But she said the more important focus should be on the pace of rate hikes after the Fed decides to move.
“The committee’s expectation is that it will be a very gradual path and ... will depend very much on the actual performance of the economy,” she said.
