The US Federal Reserve has been holding back on raising interest rates and could hold off until March to avoid a “bubble”
Fed Chair Janet Yellen has said she wants to keep interest rates near zero for the first few months of the new year, despite the ongoing global economic recovery.
“I’m very much in favor of keeping rates very low,” Yellen told CNBC in an interview on Wednesday.
“But I don’t want to wait until March, which is what I think we need to do, to make sure we get that done.”
The Fed has said it would only start raising rates if the economy picks up speed.
The US economy has been humming along.
The unemployment rate dropped below 4 percent last month, and it’s on track to reach a more even 4 percent by the end of the year.
Yellen’s plan would see the Fed keep interest rate on hold until it reaches a 2 percent level, but not raise it higher.
“There are many ways to do it, but I think the path that we’ve followed so far is the one that we think is most appropriate for the economy right now,” Yellin said.
Yellin has said that interest rates should stay low until at least late 2019, which would be the earliest the Fed would be willing to increase them.
But in an effort to push ahead with her plan, Yellen is planning to hold off on raising rates until early 2019.
The Fed is trying to get the economy growing again by cutting interest rates, which are currently close to zero, but the market has warned that the economy is unlikely to get back to full employment in time.
In addition, Yellen has said there’s a risk that inflation will rise, which could hurt the US dollar.
Yellen also said the Fed will consider raising rates in the second half of 2019 if inflation is high enough, a move that would put pressure on the US economy to boost consumer spending.
But economists are worried that even if the Fed is able to keep rates low, the US will have to cut spending and hiring as well, leading to a recession.
The economy will slow in 2019 and 2020 as the Fed holds off on tightening monetary policy, according to Yellyn.
“So I think in 2019 it’s going to be harder for the US to recover than in 2020,” she said.
“And 2020, 2021, and 2022 are going to take longer.
And so, there’s no reason to be optimistic.”
Read more about Fed, US economy,economy,economics,economist,federal reserve,banking source Business News title Federal Reserve chief Janet Yellins plan to hold firm on rate hike, but risks ‘bubble’ article US central bank chief Janet Lellen told the Financial Times that she wants the Fed to hold interest rates steady for the next few months to avoid another “bubbled” financial crisis.
Yelling that the US was heading into “a crisis of confidence” and “a big problem”, she said the Federal Reserve would wait until it gets a clearer picture of the economy before raising rates.
“This is going to happen.
The Fed is going do its best to get it done,” Yelin said.”
But I’m also very concerned about what’s happening in the economy.”
Yellen has warned the US might need to raise interest rates before the end the year to avoid an economic meltdown.
“If we don’t, we’re going to have a real crisis of liquidity, we’ll have a recession,” she told the FT in a recent interview.
“It’s going have a big impact on consumer confidence and so on.”
Yellins has been pushing the Fed not to raise rates too soon, but she is worried about the economy.
She also said she has not seen the evidence to support her argument.
“You can’t just say we’ve got no evidence of a recession happening, we’ve only had one and it hasn’t been the best,” Yelle said.