Fed chief positive on economy despite hurricanes
WASHINGTON — Federal Reserve Chair Janet Yellen on Sunday sketched a bright outlook for the U.S. economy and for inflation prospects in coming months, saying the impact of the recent hurricanes probably will slow economic growth slightly but only temporarily and should be followed by a rebound by year’s end.
Her comments suggested that the central bank will resume raising interest rates to reflect the strengthening economy. Most economists foresee the next rate hike — the third this year — coming in December.
Speaking to an international banking seminar, Yellen acknowledged that the persistence of undesirably low inflation this year has been a surprise. But she said she expected inflation to start picking up as the effects of temporary factors, such as falling prices for consumer cellphone service, start to fade.
“Economic activity in the United States has been growing moderately so far this year, and the labor market has continued to strengthen,” Yellen said in a speech to a panel that included central bank officials from China, Japan and the European Central Bank.
Of the hurricanes that struck Texas, Florida, Puerto Rico and the Caribbean, Yellen said, “While the effects of the hurricanes on the U.S. economy are quite noticeable in the short term, history suggests that the longer-term effects will be modest and that aggregate economic activity will recover quickly.”