Fed hints possible interest rate hike in mid-2015

Global Business

The head of the U.S Federal Reserve predicted that interest rates would raise sometime next year but likely not in the first few months. CCTV America’s Daniel Ryntjes reported this story from Washington, D.C.

Fed hints possible interest rate hike in mid-2015

The head of the U.S Federal Reserve predicted that interest rates would raise sometime next year but likely not in the first few months. CCTV America’s Daniel Ryntjes reported this story from Washington, D.C.

Federal Reserve Chair Janet Yellen is feeling pretty good about the U.S economic recovery after six years of uncertainty. She has hinted that maybe the policy-setting Federal Open Market Committee will introduce a rate hike in the middle of next year.

“A number of committee participants have indicated that, in their view, conditions could be appropriate by the middle of next year, but there is no preset time, and there are a range of views as to when the appropriate conditions will likely fall in place,” she said.

Yellen said that the slide in the oil price will also provide the equivalent of a tax cut to the American consumer and will help keep inflation low for the time being. Because inflation is low, the Fed can afford to maintain what it calls “accommodative” monetary policy, meaning the U.S central bank can continue to encourage low borrowing costs.

“Even as we begin to normalize the stance of monetary policy, when that becomes appropriate, it’s important to remember that monetary policy will still be very accommodative for a long time,” Yellen said.

Following its latest two-day policy meeting, the Fed introduced a new word, “patience” into the regular statement it publishes. If change comes, it is likely it would be gradual and predictable.