ANKARA
U.S. Federal Reserve President Janet Yellen has said the U.S. economy is improving, with indicators showing that unemployment is on the decline and inflation getting closer to the Fed's less than two percent target.
As she has said previously, the Fed expects to raise interest rates in the U.S. before the end of this year.
"Based on my outlook, I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy," Yellen said on Friday. "I want to emphasize that the course of the economy and inflation remains highly uncertain, and unanticipated developments could delay or accelerate this first step," she said.
But Yellen is clearly not satisfied with the pace of growth in the U.S. and she thinks unemployment is greater than the numbers express.
"It is my judgment that the lower level of the unemployment rate today probably does not fully capture the extent of slack remaining in the labor market—in other words, how far away we are from a full-employment economy," she said.
Job creation was a bit below expectations in June. The unemployment rate dropped to 5.3 percent, but that was largely due to a marked decline in the labor force participation rate, which was at its lowest level in about 37 years.
Wages have grown very little. Average hourly earnings were flat for the month and are rising at just 2 percent annualized basis, according to the Labor Department.
"Looking further ahead, I think that many of the fundamental factors underlying U.S. economic activity are solid and should lead to some pickup in the pace of economic growth in the coming years," Yellen said. "In particular, I anticipate that employment will continue to expand and the unemployment rate will decline further," she added.
