US Federal Reserve Speaks about the Status of the US Economy

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Federal Reserve Chairwoman Janet L. Yellen today assured Americans that the country’s economy was still healthy despite recent concerns. This report raises concerns that the Federal Reserve was contemplating about raising the interest rates before the end of the year. She confirmed that this had been made possible by the strengthening of the world economy and the US was a direct beneficiary. Also, increased investment by companies in the nation had contributed to the strong economy. The chairwoman further confirmed that strong job growth had made the US economy strong. She made these remarks at a conference known as Group of 30. For starters, this is a gathering that consists of private-sector bankers and international policymakers. She referred to the latest growth in the economy to justify why the Federal Reserve should increase its interest’s rates. She further said that this was important if they would stabilize inflation below two percent. This was also necessary to ensure there is a healthy labor market in the US. She further said that this was necessary for a long-term objective. At the moment, the Federal Reserve has already raised its interests’ rates twice this year. This happened in the months of March and June when the rates were raised to one and 1.25 percent respectively. By mid-December, policymakers expect the Federal Reserve to increase the interests’ rates by another 0.25 percent.

Just two months ago, the Fed announced that a decision had been made to reduce its holdings in mortgage bonds and Treasuries. To ensure that the borrowing costs remained low, the Federal Reserve decided to buy these bonds. This also played a part in stimulating the economic activity in the US. Ms. Yellen was also skeptical to the speculations that the monetary policies had been influenced by some domestic fiscal policies as well as the prospects of tax cuts. She termed these speculations as unfounded and misleading. She further said that the Fed cannot confirm whether the prospect of tax cuts had led to increased investment. Her agency is also waiting to see what will happen once the policies have been implemented. The US economy experienced a reduction in the jobs added monthly last month when only 171,000 jobs were added to the economy. At the moment, the average number of jobs being added to the economy is 187,000 jobs monthly. However, this was attributed to Hurricane Harvey and Irma that struck Texas and Florida respectively.

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