Yellen defends Fed policy, calls for gradual hikes

Janet Yellen

In a letter Monday, Yellen called an interest rate hike "appropriate" if officials see progress toward labor and inflation goals.

Federal Reserve Chair Janet Yellen on Monday argued for gradual rate normalization, and called an interest rate hike "appropriate" if central bank officials see progress toward labor and inflation goals.

Responding to an open letter from consumer advocate Ralph Nader, Yellen defended the Fed's accommodative policy, contending it helped boost the job market and asset prices in the wake of the global financial crisis. Late last month, Nader criticized near-zero interest rates, claiming they hurt savers and burdened people on fixed incomes.

"We all hope and expect that the economy will continue to expand, that the jobs market will continue to make progress, and that inflation will move toward our 2 percent price stability objective," Yellen wrote. "If that is the case, my colleagues and I have indicated it will be appropriate to begin to normalize interest rates."

She stressed that rate hikes will come gradually, adding that an "overly aggressive" increase would help savers "only temporarily." Nader previously implied that the Fed excluded savers from its policy decisions and instead focused on pleasing the financial sector.

Traders have eyed any rate commentary from Yellen and other members of the Fed's policy-making committee ahead of its next meeting in December. Officials have implied they will strongly consider moving from near-zero interest rates at the meeting.

The next clue about the employment situation will come early next month, with the release of November jobs data.

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