U.S. Federal Reserve chairwoman Janet Yellen testifies before the Senate Banking Committee on Capitol Hill in Washington D.C., the United States, on June 21, 2016. U.S. Federal Reserve chairwoman Janet Yellen on Tuesday reiterated the central bank's intention to raise interest rates, taking a cautious approach in view of an uncertain U.S. economy. (Xinhua file photo/Yin Bogu)
WASHINGTON, Aug. 26 (Xinhua) -- U.S. Federal Reserve Chair Janet Yellen said on Friday that the case for another interest rate hike has strengthened as the U.S. economy and labor market continue to improve.
"In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months," Yellen said in a speech to a conference of central bankers in Jackson Hole, the U.S. state of Wyoming.
"Of course, our decisions always depend on the degree to which incoming data continues to confirm the (Fed policy) committee's outlook," Yellen said, declining to offer a specific timetable for the next rate hike.
The Fed raised its target range for the federal funds rate by 25 basis points to 0.25-0.5 percent in December last year, the first rate hike in nearly a decade.
However, a slowdown in global economy since the start of this year and other global financial risks have made Fed policymakers cautious to hold off on any further rate hikes.
Pointing to solid growth in household spending and a strengthening job market, Yellen said that the U.S. economy is "now nearing" the Fed's statutory goals of maximum employment and price stability.
While U.S. economic growth has not been rapid, it has been "sufficient to generate further improvement" in the labor market, Yellen noted, adding that job gains averaged 190,000 over the past three months.
The U.S. economy grew at an annual rate of 1.1 percent in the second quarter this year, down from a previous estimate of 1.2 percent, the Commerce Department said Friday.
The moderate growth in the second quarter followed a sluggish pace of 0.8 percent in the first quarter, underscoring the weak performance of the world's largest economy in the first half of 2016.
But the Fed "continues to anticipate" that gradual increases in the federal funds rate will be appropriate with moderate economic growth, additional strengthening in the labor market and inflation rising to 2 percent over the next few years, Yellen said.
Analysts said it's possible for the Fed to hike interest rates as soon as September. But about 71 percent of 62 economists surveyed by the Wall Street Journal this month believed that the Fed will wait until December to raise rates.
With no strong inflationary tendencies, the Fed can continue at a gradual pace and guide market expectations accordingly, said economists at the Institute of International Finance (IIF) Friday in a report, expecting one rate hike in December and two more in 2017.
