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US rate hike possible later this year: Yellen

by ChemOrbis Editorial Team -
  • 14/07/2015 (12:11)
According to media reports, the chair of Federal Reserve (FED), Janet Yellen, reported that she expects the Fed to increase interest rates this year. Yellen stated that despite a weak labor market and contraction in the economy in the first quarter as well as the economic turmoil in Greece and China, the US economy will grow steadily for the remainder of 2015, allowing the Fed to increase interest rates for the first time since the onset of the global economic crisis. The Fed has kept rates near zero for almost seven years.

"I expect it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy. But I want to emphasize that the course of the economy and inflation remains highly uncertain. We will be watching carefully to see if there is continued improvement in labor market conditions, and we will need to be reasonably confident that inflation will move back to 2 percent in the next few years." said Yellen.

In the first quarter, a widening trade deficit and smaller inventories as well as a stronger dollar caused the US economy to shrink 0.2%. Heavy winter conditions also hampered consumer spending.
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