Yellen, Fed: "The risks for the US economy are rising"

The risks for the US economy are rising, according to the statements of the president of the Federal Reserve (Fed), Janet Yellen, who indicated yesterday that the institution that she leads to postpone a new hike of the interest rate after it was decided in December last year.

"The financial statements in the US have become, lately, less favorable to growth", said Mrs. Yellen, in an interview before the Financial Services Commission of the Chamber of Representatives, and she said that the decline of the major stock markets, the higher interest rates for risky borrowers and the future strengthening of the dollar represent threats to the address of the world's biggest economy.

Janet Yellen said: "These developments, if they prove persistent, they could have a negative impact on the economic outlook and the labor market".

Fed official also mentioned to the fears generated by the fact that many oil companies have gone into default, and respectively that the slowdown of the Chinese economy and the decline of the yuan, have generated the recent volatility in the markets.

"These fears will play a major role in the Fed's decision to raise the interest rates this year. The American economy is facing many global threats that could require the Fed to slow the pace of the future increases of the cost of borrowing", said Janet Yellen, who stressed: "We are very closely watching what is happening in the international markets".

Janet Yellen said that the Fed is waiting to gradually raise the policy rate this year, warning that it does not have a preset trajectory, so it is possible that the Fed may raise the cost of borrowing more slowly, if the economy doesn't have a satisfactory evolution.

"The level of the interest rate (...) will depend on what the data concerning the economic outlook tells us. If the economy disappoints, a lower interest level will be adequate", said Janet Yellen.

In December 2015, the Fed raised the policy rate for the first time in the last decade, and she thinks that the first economy of the world has overcome the damage caused by the financial crisis of 2007-2009.

Since the end of 2008, until December 2015, the policy rate of the Fed has been kept between 0 and 0.25% to support the turnaround of the economy.

After the first raise, the one in 2015, the Fed was announcing four new hikes in 2016, but analysts currently don't expect the US central bank to raise the interest rate any time soon. A first hike was scheduled in March.