NAM: In House testimony, Yellen says rates likely to be raised this year

Federal Reserve Chair Janet Yellen on Wednesday suggested that the central bank is still on track to begin raising interest rates later this year, though she predicted that the rate of increases would not be rapid.

The AP (7/16, Crutsinger) reports that Yellen, addressing the House Financial Services Committee, said that “she is encouraged by signs that the economy is reviving after a brutal winter” and if “the improvements stay on track, the Fed will likely start raising interest rates later this year.” However, Yellen “downplayed the importance of the timing of the first rate hike.” The Los Angeles Times (7/16, Lee) reports that Yellen “offered an optimistic outlook for the U.S. economy, including workers’ wages, and reaffirmed that the central bank is likely to begin raising interest rates later this year.”

Bloomberg News (7/16, Condon) reports Yellen said in her prepared testimony, “If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate target.” She added that Fed officials expect economic growth “to strengthen over the remainder of this year and the unemployment rate to decline gradually.” The Wall Street Journal (7/16, Hilsenrath, Davidson, Subscription Publication) reports that Yellen suggested that overseas turbulence, such as the situation in Greece and the drop in the Chinese stock market, won’t delay a rate increase. She warned, “If we wait longer, it certainly could mean that when we begin to raise rates we might have to do so more rapidly. An advantage to beginning a little bit earlier is that we might have a more gradual path of rate increases.”