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Central bank Chair Janet Yellen said the Federal Reserve does not keep a 'fixed timetable' for raising federal funds rates.
Speaking before the House Financial Services Committee on Wednesday for her semiannual testimony, she reassured that rate hikes will happen, especially since the strong gains in the jobs market could drive the inflation target beyond the targeted two percent. If the strong track performance continues, she says, the Fed will need to gradually remove the present accommodative stance.
However, Yellen cautioned that the current rate of job creation may cause the economy to overheat, as a higher-than-targeted inflation rate will prompt the Fed to raise rates faster than pace it would like, which could push the economy off the edge and into another recession.
During her speech, Yellen said the Fed is also considering stress tests that will require higher capital from the country's biggest banks.
