US rate hike could come ‘relatively soon’ says Yellen

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Federal Reserve chair Janet Yellen has hinted that a US rate hike is coming “relatively soon” in her first comments since Donald Trump won last week’s presidential election.

Futures contracts are currently pricing a greater than 90 per cent chance of a rate hike at the next meeting for the Federal Open Market Committee on December 13-14.

Markets are predicting a quarter-point hike, Bloomberg reports.

Yellen told a Congress economic committee that a rate hike “could well become appropriate relatively soon if incoming data provide some further evidence of continued progress toward the [FOMC’s] objectives.”

“Were the FOMC to delay increases in the federal funds rate for too long, it could end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of the Committee’s longer-run policy goals.

“Moreover, holding the federal funds rate at its current level for too long could also encourage excessive risk-taking and ultimately undermine financial stability.”