“As we expect further improvement in the economy, there is no need to maintain low interest rates,” Janet Yellen, head of the Federal Reserve System, says.
Six years ago the Fed reduced interest rates to near zero. Today, the unemployment rate is dropping, economic growth is expanding and the central bank may increase interest rates up to the average level.
Such a boost may cause an overheating economy, and in its turn, inflation will exceed the level where it can harm the economic growth, Chair of the Fed noted. However, the decision to increase interest rates will depend on the dynamics of economic indicators, and the rates will grow quite slowly.
Last month consumer prices grew by 0.1%. The index excluding food and energy prices rose by 0.3%. This value shows that during 2014 prices advanced by 1.8%. This is the optimal level for price stability and healthy employment, the central bank experts say.
Nevertheless, investors assess the US economic perspectives with certain caution which results in adjustments being made by rating agencies to the predicted recovery rate of the US economy, which was cut by 0.4 percentage points to 2.4%.
