The Federal Reserve has reiterated that it is on course to raise interest rates in 2015, as Chair of the Federal Reserve described the US economy’s prospects as “favourable”.
Hiring has pushed the country towards maximum employment, while factors that have been holding back inflation were likely to diminish, Yellen indicated in a prepared statement ahead of appearing in front of the House Financial Services Committee.
The Chair emphasised employment increasing since the trough in employment as a result of the recession, predicting factors holding inflation down were likely to subside.
"The anticipated path of the economy, not statements of intent to raise rates at any particular time," is the key factor, Yellen said.
Treasury yields rose on her testimony, while the euro has dropped by 0.33 per cent on the day, to $1.0974 against the buck.
Looking forward, prospects are favourable for further improvement in the US labour market and the economy more broadly
If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate target, thereby beginning to normalise the stance of monetary policy.
The Federal Reserve is likely to being hiking rates later this year if the economy continues as expected, though officials at the Federal Reserve have been divided over when to start the process.
Yellen pointed to the Greek debt talks, China’s attempts to tackle high debt, weak property markets and “volatile” financial conditions as risks to the US economy.