(MENAFN- The Peninsula) The Federal Reserve is considering raising near-zero interest rates this year even though this may slow the US recovery, Fed Chair Janet Yellen said.
The Federal Open Market Committee is now "giving serious consideration to beginning to reduce later this year some of the extraordinary monetary policy accommodation currently in place," Yellen said in a speech in San Francisco, according to the prepared text.
Yellen emphasised that the FOMC was taking a "gradualist approach" as it weighs whether the economy is strong enough to weather higher rates.
Earlier this month, the Fed's policy arm opened the door to a federal funds rate hike as early as midyear, dropping the word "patient" in its post-meeting statement. But a string of weak economic data, particularly in consumer spending, housing and manufacturing, has muddied the outlook for an increase in rates pegged at the zero level for more than six years.
The central bank took note of the sluggishness in mid-March, saying that growth prospects were more muted than they were just three months ago.
The US central bank slashed 0.3 percentage point from its growth forecast for this year, to 2.3-2.7 percent, in part because American households had tailed back spending. Still, the recovery from the Great Recession that ended in 2009 appeared on track enough to sustain a rate hike.
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