Fed Chair Janet Yellen says global risks and a U.S. hiring slowdown warrant a cautious approach to raising interest rates. Rough Cut (no reporter narration).
ROUGH CUT (NO REPORTER NARRATION) Global risks and a U.S. hiring slowdown warrant a cautious approach to raising interest rates as the Federal Reserve looks for confirmation that the country's economic recovery remains on track, Fed Chair Janet Yellen said on Tuesday. In prepared testimony before the Senate Banking Committee, Yellen outlined how the central bank was thrown off course within weeks of raising rates last December by a slowdown in domestic growth and international events, including concerns over China's economy and a further collapse in oil prices. Some of those clouds remain, Yellen said in comments that seemed to signal no pressing need for the Fed to raise rates. Before a further tightening of monetary policy, she said, the Fed needs to be sure U.S. economic growth and hiring have rebounded and there is no shock from the outcome of Britain's June 23 vote on whether to leave the European Union. "The pace of improvement in the labor market appears to have slowed more recently, suggesting that our cautious approach ... remains appropriate," Yellen said. "Proceeding cautiously in raising the federal funds rate will allow us to keep the monetary support to economic growth in place while we assess whether growth is returning to a moderate pace, whether the labor market will strengthen further, and whether inflation will continue to make progress," she said. With a weak global economy, low U.S. productivity and other factors holding down interest rates in the long run, Yellen said the Fed's benchmark overnight interest rate is likely to remain low "for some time."