U.S. Federal Reserve chairwoman Janet Yellen said on Monday that gradual interest rate hikes remain appropriate by giving a cautiously optimistic view about the U.S. economic outlook, but avoided providing precise timing for the central bank's next move.
"The positive economic forces have outweighed the negative, and despite the challenges that the economy continues to face, I continue to expect further progress toward our employment and inflation objectives," Yellen said in a speech at the World Affairs Council of Philadelphia on Monday.
In her speech, she avoided giving hint about the timelines for further rate hikes, but said that she expected the federal funds rate will probably need to rise gradually over time to ensure price stability and maximum sustainable employment in the longer run. The stance was in contrast to her remarks made on May 27, when she expected rate hikes in coming months might be appropriate.
Some analysts hold that the reason for her current prudent remarks might be found in the recent disappointing job data. The total nonfarm payroll employment increased by only 38,000 in May, the weakest performance since September 2010. However, Yellen said in her speech that one should never attach too much significance to any single monthly report, and other timely indicators from the labor market have been more positive.
In her speech, she pointed four areas of uncertainty the U.S. economy is facing, including the weak business investment, overseas risks, low productivity growth in U.S., and low inflation. U.S. Fed has kept the benchmark short-term interest rates unchanged after it raised the rate last December.
After the release of May's job data last week, the market now sees an interest rate hike in June unlikely.
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