Federal Reserve Chair Janet Yellen says the US economy has come a long way in recovering from the 2008 financial crisis, and the Fed is getting close to achieving its goals of maximum employment and stable inflation.
But in a speech in San Francisco Wednesday, she said she can't say when the next interest rate will occur or how high rates will rise. She says that will depend on how the economy performs in the coming months.
She says Fed officials, who boosted rates for a second time last month, expect to raise rates "a few times a year" until they have pushed the Fed's benchmark rate close to 3 per cent by the end of 2019. The rate now stands in a range of 0.5 per cent to 0.75 per cent.
The 3 per cent level for the Fed's target for the federal funds rate, the interest that banks charge each other, is the point that the Fed currently believes is the so-called neutral rate " the level where the Fed's interest rate policies are not spurring growth or holding it back.
"Right now our foot is still pressing on the gas pedal, though, as I noted, we have eased back a bit," Yellen said. "Our foot remains on the pedal in part because we want to make sure the economic expansion remains strong enough to withstand an expected shock, given that we don't have much room to cut interest rates."