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Yellen: Economy still on track for December interest rate hike

Next FOMC meeting less than two weeks away

While Federal Reserve Chair Janet Yellen did not refer to the possibility of a rate hike during the upcoming Fed meeting, she said the current outlook and the flow of data since the central bank's last meeting in October are "consistent" with the rate hike criteria spelled out by U.S. policymakers, an article in Reuters said.

Federal Reserve Chair Janet Yellen opened a Congressional committee hearing on the U.S. economy on Thursday with an upbeat assessment of where the country stands as the Fed marches towards its first interest rate hike in a decade.

"I currently judge that U.S. economic growth is likely to be sufficient over the next year or two to result in further improvement in the labor market," Yellen told lawmakers. "Ongoing gains in the labor market, coupled with my judgment that longer-term inflation expectations remain reasonably well anchored, serve to bolster my confidence in a return of inflation to 2 percent."

Back in November, in a speech before the House Financial Services Committee, Yellen formalized the possibility of a rate hike in December, telling the Committee that December’s meeting is a “live possibility” for a rate increase.

From the Wall Street Journal recap of Yellen’s testimony:

The Fed expects “the economy will continue to grow at a pace that’s sufficient to generate further improvements in the labor market and to return inflation to our 2% target over the medium term, and if the incoming information supports that expectation, then our statement indicates that December would be a live possibility,” Ms. Yellen said Wednesday while testifying before the House Financial Services Committee. “But importantly, we’ve made no decision about it.”

The Fed has not raised interest rates since June 2006. 

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