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CCTV Script 19/01/17

This is the script of CNBC's news report for China's CCTV on January 19, Thursday.

Welcome to CNBC Business Daily.

The U.S. economy is closing in on the Federal Reserve's goals, giving the central bank impetus to start reducing the extreme levels of support it has provided over the past decade, Chair Janet Yellen said in a speech Wednesday.

After more than a decade of benefiting from historically aggressive easing measures, the economy is "close" to the Fed's objectives, though policy removal is expected to be slow, Yellen said in San Francisco. The speech, to the Commonwealth Club, essentially served as a monetary policy primer, though she did drop some hints about the road ahead.

"As the economy approaches our objectives, it makes sense to gradually reduce the level of monetary policy support," Yellen said, according to prepared remarks.

She said the long-run unemployment rate is probably 4.75 percent, just above the current 4.7 percent. Inflation is "inching back" toward the Fed's 2 percent goal, which has remained elusive even as the economy has stayed out of recession for nearly eight years and unemployment is at its lowest level since late 2007.

Despite the economic improvements, the Fed has remained cautious.

"Right now our foot is still pressing on the gas pedal, though, as I noted, we have eased back a bit," Yellen said.

"Our foot remains on the pedal in part because we want to make sure the economic expansion remains strong enough to withstand an unexpected shock, given that we don't have much room to cut interest rates," she added.

Indeed, even with the hikes of the past two Decembers the funds rate remains in a target range of 0.5 to 0.75 percent, with the actual rate most recently at 0.66 percent. While Fed officials have indicated a more aggressive rate-hiking schedule, traders believe there will be at most two moves this year - one in June and another in November or December. Futures contracts imply a funds rate of 1.07 percent by the end of the year.

Meanwhile, Fed's Beige Book, published also on Wednesday, showed a pickup in manufacturing, "widespread" reports of labor shortages and improving business investment set the stage for the Federal Reserve's December rate hike amid signs of steady economic growth across the country, the Fed reported Wednesday in its latest Beige Book compendium of economic conditions.

Critics worry that the FOMC will fall behind the curve should growth accelerate and force interest rate increases at a faster pace than markets anticipate. However, Yellen said low productivity levels likely will keep inflation from getting out of control.

The funds rate, which banks charge to lend to each other overnight, likely will be at 3 percent by the end of 2019, a target that Yellen acknowledged is "a full percentage point lower than our estimate just three years ago."

CNBC Qian Chen, reporting from Singapore.

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