Fed's Yellen Says Policy 'Well-Positioned' To Tame Inflation

Federal Reserve Bank President Janet Yellen said U.S. interest rates "are within range of the desired setting" but that inflation from a "gangbusters" labor market remains a risk.

"Let me be clear that I do want inflation to move down, but I believe policy may now be well-positioned to foster exactly such an outcome," Yellen said in a speech to the Arizona Council on Economic Education.

A copy of her remarks was made available in advance.

The fed funds rate at 5.25 percent "is currently within the moderately restrictive range that appears appropriate" given "middling" economic growth and the still-uncertain inflation
outlook, Yellen said.

Recent lower readings on inflation have been "encouraging," but are yet to show up in the data on a sustained basis, she said.

Financial markets assess that the policy-setting Federal Open Market Committee will hold rates steady for several months. Yellen is not a voting member of the FOMC this year.

"While I am inclined to see labor market tightness as transitory, I do see it as a serious risk," she said.

On balance, Yellen said the U.S. economy seems "on a glide path for the proverbial 'soft landing.'"

Worries about the weak housing market pulling the country into recession "have been largely allayed," she said.

Consumer spending remains solid, and most sectors of the economy apart from housing are "pretty robust."

Contact U.S. News


    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More

Don't Miss

U.S. Video

  • As port congestion in Los Angeles and Long Beach is being called the worst ever, and as contract negotiations drag on, CNBC goes inside the dispatch hall where jobs are issued every morning to work the cranes and talks to Luke Hollingsworth of the ILWU.

  • In addition to tech titans, a number of startups are also chasing virtual reality with the help of some venture capitalists. Details, with CNBC's Josh Lipton.

  • Dissecting today's current market conditions, with Gordon Charlop, Rosenblatt Securities, and Ben Willis, Princeton Securities.