U.S. stocks increased on Tuesday after Janet Yellen, Federal Reserve Chairwoman, noted in a speech that the Fed would proceed with caution when it comes to interest rate hikes.
During her speech at the Economic Club of New York, Yellen noted the Fed will move precariously based on issues such as low inflation and the overall weak global economy.
“Given the risks to the outlook, I consider it appropriate for the (Fed’s policymaking committee) to proceed cautiously in adjusting policy,” Yellen said. “This caution is especially warranted because, with the federal funds rate so low, the FOMC’s ability to use conventional monetary policy to respond to economic disturbances is asymmetric. If economic conditions were to strengthen considerably more than currently expected, the FOMC could readily raise its target range for the federal funds rate to stabilize the economy.”
These comments echo the Fed’s announcement early in March that it plans to halve its rate hikes this year, from four to two.
Read Yellen’s entire speech here.