WASHINGTON (AP) – Federal Reserve Chair Janet Yellen sought to reassure worried lawmakers on Thursday that when the Fed begins to raise interest rates, it will be careful not to derail the economy.
Delivering her second day of congressional testimony, Yellen responded to concerns from some Democratic senators that once the Fed does start raising rates, it could set back job market and income gains.
Both Sens. Robert Menendez, D-New Jersey, and Charles Schumer, D-New York, told Yellen that with inflation at such low levels now, it would be a mistake for the Fed to begin raising interest rates too quickly. The more prudent course, they said, would be to keep rates low and give the labor market more time to heal from the Great Recession.
Yellen said the Fed was facing a delicate balancing act in achieving its dual goals of achieving maximum employment and stable prices.
“We don’t want to cut off job growth and income growth, and we do want to see inflation move up to 2 percent,” Yellen said. “We would not be pleased to see it linger indefinitely below 2 percent.”