Federal Reserve Chair Janet Yellen painted a bright outlook on the U.S. economy during her speech at the Group of 30 International Banking Seminar Sunday in Washington, D.C.

During her speech, Yellen recognized the effects of the recent hurricanes, and explained that, while devastating, their long-term economic consequences will be minimal.

“Economic activity in the United States has been growing moderately so far this year, and the labor market has continued to strengthen,” Yellen said.

“The terrible hurricanes that hit Texas, Florida, Puerto Rico, and our neighbors in the Caribbean caused tremendous damage and upended many lives, and our hearts go out to those affected,” Yellen added. “While the effects of the hurricanes on the U.S. economy are quite noticeable in the short term, history suggests that the longer-term effects will be modest and that aggregate economic activity will recover quickly.”

Yellen explained the Fed previously estimated that effects such as the fall in oil prices and appreciation of the dollar, which began in mid-2014, would fall off by this year, allowing inflation to rise to 2%. However, that has yet to happen as inflation continually fails to hit the Fed's 2% target.

“Inflation readings over the past several months have been surprisingly soft, however, and the 12-month change in core PCE prices has fallen to 1.3%,” Yellen said. “The recent softness seems to have been exaggerated by what look like one-off reductions in some categories of prices, especially a large decline in quality-adjusted prices for wireless telephone services.”

Yellen went on to suggest that inflation should rise in the near future.

“More generally, it is common to see movements in inflation of a few tenths of a percentage point that are hard to explain, and such ‘surprises’ should not really be surprising,” Yellen said. “My best guess is that these soft readings will not persist, and with the ongoing strengthening of labor markets, I expect inflation to move higher next year. Most of my colleagues on the FOMC agree.”

However, minutes from the Federal Open Markets Committee September meeting show Fed members are growing increasingly concerned over inflation, saying it may even be a longer-term issue.

Regardless, both the Fed minutes and Yellen’s speech reflect the expectation that 2017 will see one final rate hike in December.

Currently, traders are forecasting a 90% chance of a rake hike at the Fed’s December meeting, according to the CME Group’s FedWatch tool.

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