Feb 14, 2017

Janet Yellen bullish on the U.S. economy

AP Photo/Andrew Harnik

In her opening remarks during her first testimony before the 115th Congress, Janet Yellen talked up the U.S. economy, and suggested that the Fed would raise interest rates several times this year. Yellen said:

  • After adding 16 million jobs since 2010, the American economy's 4.9% unemployment rate has returned to a "normal" level.
  • Investment by businesses remains depressed, which has helped lead to mediocre GDP growth
  • Low, but rising, inflation means that the Fed will soon move to raise interest rates again
  • Fed policy is fluid — if the economy suffers a downturn, Yellen stands ready to act.

Stocks fell on Yellen's testimony, as higher interest rates lead to cheaper stocks as investors demand higher returns to compete with higher interest rates. The dollar, on the other hand, rose, as higher interest rates in the U.S. will attract more investment.

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