The US economy faces a number of global threats that could derail growth and compel the Federal Reserve to slow the pace of future interest rate hikes, chair Janet Yellen has said.
In her report to Congress on Wednesday, she noted the widening fallout from concerns over China’s weaker currency and economic outlook, which is rattling financial markets around the world.
While the Fed expects to raise interest rates gradually, they are not on any pre-set course, she said. The Fed would likely move slower “if the economy were to disappoint”.
Ms Yellen did mention in her prepared comments to the House Financial Services Committee that it was possible that the recent economic weakness could prove temporary, setting the stage for faster economic growth and a stronger increase in inflation than the Fed is currently forecasting.
Should that occur, the Fed will be ready to hike rates more quickly than currently anticipated.