The U.S. central bank is likely to finish its stimulus program in October, Federal Reserve chief
Speaking at the
Yellen said that the Fed will keep scaling back its asset purchases at upcoming policy-setting meetings "with purchases concluding after the October meeting."
Yellen reiterated that the Fed will keep interest rates in the current range between zero and 0.25 percent "for a considerable period" after finishing buying Treasury bonds and agency mortgage-backed securities.
But she said an "increase in the federal funds rate target likely would occur sooner and be more rapid than currently envisioned" if the labor market continues to improve more quickly than anticipated by the policy-setting Federal Open Market Committee.
The Fed decided last month to further reduce its monthly stimulus, in which it pumps cash into the market by purchasing assets, to
On the possible formation of asset bubbles, she said the Fed recognizes that low interest rates may provide incentives for some investors and that "those actions could increase vulnerabilities in the financial system to adverse events."
"While prices of real estate, equities and corporate bonds have risen appreciably and valuation merits have increased, they remain generally in line with historical norms," she said.
The Fed chief told the congressional session that the central bank is ready to provide details about its strategy for normalizing monetary policy "later this year" through the envisioned end to quantitative easing.
"I and other FOMC participants continue to anticipate that economic activity will expand at a moderate pace over the next several years," Yellen said.
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