The U.S. economy may have a couple of targets pinned on its back but at least the nation’s Central Bank isn’t giving up on the U.S. recovery just yet.
Tightening financial conditions and uncertainty over China are bothersome, and stock investors clearly have the jitters. But at her recent semi-annual appearance before U.S. lawmakers, Fed Chair Janet Yellen said that chances the Fed will reverse the rate tightening cycle it began in December are slim.
In prepared remarks, she acknowledged that a series of global problems have grown worse since the Fed raised interest rates from near zero in December. These developments, if they prove persistent, could weigh on the outlook for economic activity and the labor market in the U.S., she admitted.
“But I think we want to be careful not to jump to a premature conclusion about what’s in store for the U.S. economy. I don’t think it is going to be necessary to cut rates,” she said.
The Fed Chair said she expected continued U.S. growth that will allow the Fed to pursue its plan of gradual rate hikes. But she emphasized the process is not on automatic pilot, and said the markets will need to stabilize more before we see any additional rate hikes this year.
Cambridge Realty Capital Companies Chairman Jeffrey A. Davis says the message for senior housing/healthcare borrowers is as clear as it’s going to get. The Fed remains committed to returning interest rates to more normal levels but will keep a close eye on inflation and other economic indications.
