U.S. Federal Reserve chair Janet Yellen said on Thursday that it will be appropriate for the central bank to hike interest rate relatively soon, and warned of the risks of keeping rate low for too long.
"The (Federal Open Market) Committee judged that the case for an increase in the target range had continued to strengthen and that such an increase could well become appropriate relatively soon if incoming data provide some further evidence of continued progress toward the Committee's objectives," said Yellen.
In her testimony before the Joint Economic Committee of the U.S. Congress, Yellen also warned of the risks of keeping the interest rate for too long.
She said that if the central bank delays rate hikes for too long, it could force the Fed to tighten rates relatively abruptly and could encourage excessive risk-taking and ultimately undermine financial stability.
The Fed chair gave a relatively upbeat estimate for the U.S. economic outlook, saying that economic growth is expected to "continue at a moderate pace sufficient to generate some further strengthening in labor market conditions and a return of inflation to the Committee's 2 percent objective over the next couple of years."
She also stressed that the rate hikes trajectory will remain gradual in view of the moderate economic growth. Yellen did not give comments on the recent U.S. presidential result.
The Fed will hold its next policy meeting, also the final of the year, on Dec. 13-14. Investors widely expected the Fed would move the rates at the December meeting.
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