Janet Yellen refuses to put timetable on US rate rises

New York

Janet Yellen, the head of the US Federal Reserve, refused to give a timetable for when the Fed will allow interest rates to rise back toward normal levels yesterday, despite giving a generally upbeat outlook on how the US economy will expand faster this year than it did in 2013.

In a testimony to the congressional joint economic committee, Ms Yellen said that while the job market had improved it was still far from satisfactory, and she cautioned that flat US housing market activity had disappointed the Federal Open Market Committee.

Pushed hard by the congressional committee to give a projected timetable for when interest rates would rise, Ms Yellen held firm, saying there was no timetable.

Ms Yellen simply repeated that rates would remain near zero for a considerable time and would rise only when stronger economic conditions allowed.

The Fed has helped keep interest rates near zero for more than five years as the U.S. economy recovered from the financial crisis and recession of 2008 and 2009.

In March, the Fed leader caused a stir when she suggested rates could rise about six months after the Fed ends its massive bond buying stimulus programme that is expected to finish this autumn.

“In light of the considerable degree of slack that remains in labour markets and the continuation of inflation below the committee’s 2 percent objective, a high degree of monetary accommodation remains warranted,” said Yellen in her testimony.

Ms Yellen also cautioned that protracted low rates can lead to investors chasing higher returns betting on riskier assets.

She said: “Some reach-for-yield behavior may be evident, for example, in the lower-rated corporate debt markets, where issuance of syndicated leveraged loans and high-yield bonds has continued to expand briskly, spreads have continued to narrow, and underwriting standards have loosened further.”

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