She noted that the economy continues to progress toward the twin goals. While continued growth in the labour force and employment over the trend can’t continue indefinitely and so it appears, despite everything, there is certainly room for further improvement in the labour market.
The economic growth is expected to provide this further improvement and provide the conditions for the return to the inflation target of 2 per cent next year.
She warned of the risks of waiting too long to raise interest rates.
“If the FOMC waits to raise interest rates for a long time, you may need to tighten policy relatively abrupt, in order to prevent the economy to a significant degree the shoot above the targets,” she said.
To keep the interest rate at the current level for too long can also encourage excessive risk-taking and thereby undermine financial stability.
She said that as the policy currently is just “dim accommodative” as she sees limited risks that the Fed would “serve as the post in the curve” in the near future.
She repeated, at the same time that the pace of interest rate rises in the future will be gradual.
In the speech, she mentioned nothing about the president-Trump-administration.
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