Clear Sailing Ahead: Fed's Yellen Says No Short-Term Obstacles For U.S. Economy

U.S. Federal Reserve Chair Janet Yellen said on Thursday there are no serious short-term obstacles that could derail the economic momentum.

According to a Bloomberg report, Yellen emphasized the fact that the U.S. unemployment rate has reached a low level while the labor market is strong and wage growth is picking up. Moreover, inflation has inched up from a very low level and stands just below the central bank's 2 percent target.

The Fed chair also justified the decision to boost interest rates last month for the first time in a year to 0.75 percent from 0.5 percent. She argued that near-term risks to the economic outlook "appear roughly balanced," which may pave the way for up to three further interest rate hikes throughout 2017.

2 Longer-Term Obstacles

Yellen did, however, acknowledge that there are at least two longer-term challenges ahead that need to be addressed: low productivity and the growing inequality gap.

Productivity remains at low levels, and this metric serves as a "key determinant" of living standards over the longer term. In fact, economists can't explain why exactly productivity remains at depressed levels.

In terms of low productivity, Yellen suggested that a greater share of income gains is being collected by higher educated workers which causes the income inequality gap to widen.

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