Fed chief sees low risk of inflation over 2%

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from USAToday,

Federal Reserve Chair Janet Yellen said Wednesday that she views the risk of high inflation “as significantly below” the chances of price increases persisting below normal, adding that such data likely will keep the Fed from raising interest rates rapidly.

Her remarks appeared intended to calm financial markets that had become worried about a sharper-than-expected rise in short-term rates.

Inflation currently is running below the Fed’s target of 2% a year. In a speech to the Economic Club of New York, Yellen said Fed policymakers are aware that the inflation could sometime rise substantially above 2%.

“At present, I rate the chances of this happening as significantly below the chances of inflation persisting below 2%,” but the Fed must be prepared to respond to unexpected outcomes, she said.

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