Chairman of the Fed says that rates will go up “relatively soon” and that will continue in the post – Financial Daily

By Ignacio Gallegos F.

For the first time since the unexpected victory of Donald Trump in the presidential race of the US materialized, the president of the Federal Reserve (Fed), Janet Yellen, spoke yesterday to the consequences that may have for the proposals of the president-elect and the actions that monetary policy could respond to meet their goals.

Yellen testified before the Joint Economic Commission of Congress, in which he argued that the entity that heads would change their plans if necessary, on the basis of the plan of Trump down heavily taxes and raise government spending.

"When you have greater clarity about the economic policies that could be put into effect, the Federal Open Market Committee (FOMC, the acronym in English) will have to weigh the forecasts about the impacts of these on employment and inflation, and perhaps change our projections," he said.

The authority also suggested that the next administration should keep in mind that the country is near full employment, and prices may begin to climb. "The markets are preparing for a tax package that involves a position of expansionary policy, in the context of an economy operating reasonably close to the maximum employment and inflation towards the 2%," he said.

"Relatively soon"

In his speech to parliamentarians, Yellen also pointed out that an increase of rates on federal funds "might become appropriate relatively soon, if the incoming information shows evidence for more profound progress continued towards the goals of" the Fed.

The authority warned about the risks of waiting too long to raise rates. "If the FOMC would delay an increase in the federal funds rate for too long, you might end up having to tighten monetary policy sharply in order to avoid that the economy is sobrecalentara beyond the two long-term goals," he said. "Further, to sustain the rate at current levels could encourage risk-taking and, finally, threaten the fiscal stability".

he Added, however, that the risk of that happening in the short term was low, because the current rate is only "moderately expansionary".

The words of Yellen increased bets that the action becomes the next Fed meeting, scheduled for the 13th and 14th of next month.

"A hike in December is sacramentada, not to be a surprise significant in the upcoming employment figures or in the financial markets," he told Bloomberg professor of economics, Johns Hopkins University Jonathan Wright, a former Fed official. "But the pace of increases is likely to be glacial, because the federal rate will be close to one percentage point below the FOMC estimated to be as neutral".

For her part, Yellen said that, don’t raise the rate this year, it would not be for lack of confidence in the u.s. economy. "I hope that the economic growth is kept at a moderate pace, enough to generate a strengthening in the labour market and a return of inflation to 2% in the next two years," he said.

"Reach the final,"

After the appearance of his name in the presidential campaign –when the candidate Trump criticized the low interest rates and said that the Fed was manipulated from the White House– would cause the market to doubt its willingness to continue at the head of the central bank, Yellen said that, despite criticism, will remain in office until the end of the period.

"The senate confirmed me for a period of four years, ending at the end of January 2018, and is fully my intention to get to the end of that period," he said.