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U.S. NEWS A7
Thursday 11 February 2016
US Financial Front:
Yellen warns economic weakness could slow rate hikes
MARTIN CRUTSINGER ist group, the Fed Up coali- Federal Reserve Board Chair Janet Yellen prepares to testify on Capitol Hill in Washington, Wednes-
AP Economics Writer tion, attended the hearing day, Feb. 10, 2016, before the House Financial Services Committee hearing on monetary policy
WASHINGTON (AP) — Fed- wearing T-shirts embla- and the state of the economy.
eral Reserve Chair Janet zoned with the messages
Yellen cautioned Wednes- “What Recovery?” and (AP Photo/Susan Walsh)
day that global weakness “Let Our Wages Grow.”
and falling financial mar- The group has been urg- conditions that pose risks ing months and help raise of using negative rates to
kets could depress the U.S. ing the Fed to delay further to growth. “These develop- inflation back up to the bolster the economy but
economy’s growth and rate hikes until the job mar- ments, if they prove persis- Fed’s 2 percent target rate. eventually rejected the ap-
slow the pace of Fed inter- ket improves further, espe- tent, could weigh on the The higher-valued dollar proach. Yellen suggested
est rate hikes. cially for minority groups. outlook for economic ac- has held down U.S. inflation that the issue of the Fed’s
But Yellen made clear that — Sounded her concern tivity and the labor market, by making foreign goods legal authority to impose
the Fed won’t likely find it about China’s weaker although declines in lon- cheaper for Americans. negative borrowing rates
necessary to cut rates after currency and economic ger-term interest rates and Worker pay, though, has as a means of stimulating
having raised them from outlook, which are rattling oil prices could provide begun to show its first signifi- growth still needed to be
record lows in December. markets. She also warned some offset,” she said. cant gains since the Great examined.
She did concede, though, that rising borrowing rates — Observed that the cen- Recession ended 6½ years Yellen’s testimony marked
that negative rates, which and a strong dollar could tral bank still thinks energy ago. the first of two days of
central banks in Japan slow U.S. growth and hir- price declines and a stron- — Said Fed officials consid- testimony she will give to
and Europe have recently ing, a reflection of the in- ger dollar will fade in com- ered in 2010 the possibility Congress.q
imposed, are a tool the tensified turmoil that has
Fed has at least studied. gripped markets. Still, she
In her semiannual report to said robust hiring at the
Congress, Yellen offered end of 2015 and signs of
no major surprises. And stronger pay growth could
she reiterated the Fed’s offset those drags.
confidence that the U.S. — Said the Fed still expects
economy was on track for to raise rates gradually but
stronger growth and an in- is not on any preset course.
crease in too-low inflation. The central bank will likely
At the same time, she not- slow its pace of rate in-
ed the weaker economic creases “if the economy
figures that have emerged were to disappoint,” she
since 2016 began and said.
made clear the Fed is ner- — Cautioned that the
vous about the risks from sharp declines in stock pric-
abroad. es, rising rates for riskier bor-
Her concerns about the rowers and further strength
perils to U.S. growth con- in the dollar had created
trasted with the Fed’s
statement eight weeks Federal budget in black for January on quirk
ago, when it raised inter-
est rates for the first time in MARTIN CRUTSINGER recorded a small deficit of tration and the Congressio- the costs of Social Security
nearly a decade and de- AP Economics Writer $17.5 billion. Part of the im- nal Budget Office are fore- and Medicare climb with
scribed economic risks as WASHINGTON (AP) — The provement reflected the casting this year’s deficit to the retirement of the baby
“balanced.” federal government re- fact that $42 billion in ben- top last year’s imbalance boomers. Through the first
In her testimony to the corded a budget surplus efit checks were sent out of $439.1 billion. Obama, four months of this budget
House Financial Services in January of $55.2 billion, in December because the in the new budget he re- year, which began Oct. 1,
Committee, Yellen also: helped by a timing quirk regular payment period fell leased Tuesday, projects government receipts total
— Expressed sympathy that shifted benefit pay- on a weekend. that the deficit will jump to $1.08 trillion, an increase of
with committee mem- ments to December. For the first four months of $616 billion this year while 3.2 percent over the same
bers who raised concerns The Treasury Department this budget year, the deficit the CBO is forecasting a period a year ago. Govern-
about chronically higher- said Wednesday that the totaled $160.4 billion, below deficit of $544 billion. The ment outlays total $1.24 tril-
than-average unemploy- surplus marked an im- last year’s deficit of $194.2 CBO projects that the defi- lion, down a slight 0.1 per-
ment among black Ameri- provement from January billion for the same period. cit will keep rising and top cent from the same period
cans. Members of an activ- 2015 when the government Both the Obama adminis- $1 trillion again in 2022 as for the 2015 budget year.q
