Federal Reserve Chair Janet Yellen said the central bank is concerned with growth get out of hand and thus is committed to continuing to raise rates in a gradual manner.
"We don't want to cause a boom-bust condition in the economy," Yellen told Congress in her semiannual testimony Wednesday.
While Yellen did not specifically commit to a December rate hike, her comments indicated that her views have not changed with her desire for the central bank to continue normalizing policy after years of historically high accommodation.
Markets widely expect a move next month but are not on the same page with the Fed when it comes to 2018. Current fed funds futures trading indicate only one or two hikes expected for next year, while the Fed has penciled in three for the year ahead.
"We are not seeing undue inflationary pressure in the labor market, so our policy remains accommodative," Yellen said. "But we do think it's important to gradually move our policy rate toward what I'll call a neutral level, which would be consistent with sustainably strong labor market conditions," she said.
The Fed currently targets its benchmark rate between 1 percent and 1.25 percent. Yellen's successor, Jerome Powell, told a separate congressional panel Tuesday that he sees the longer-run rate around 2.5 percent.
Yellen said the Fed does not want to stifle growth but feels strongly about keeping consistent with a labor market that is nearing full employment.
"We want to do this gradually, because if we allow the economy to overheat, we could be faced with a situation where we might have to ... raise rates and throw the economy into recession," she said. "We don't want to cause a boom-bust condition in the economy."
This is likely Yellen's final address to Congress. She has indicated she will leave the Fed when Powell is sworn into office in February.