WASHINGTON (May 7, 2014) — U.S. economic activity will grow at a moderate but steady pace for the rest of 2014, according to Federal Reserve Chair Janet L. Yellen.
“I expect that economic activity will expand at a somewhat faster pace this year than it did last year, that the unemployment rate will continue to decline gradually, and that inflation will began to move toward 2 percent,” Ms. Yellen said in testimony May 7 before the congressional Joint Economic Committee.
The Gross Domestic Product grew about 3¼ in the second half of last year, a faster pace than any time during the two previous years, Ms. Yellen said.
Conditions in the labor market have improved, according to Ms. Yellen, but are still far from satisfactory.
“Even with recent declines in the unemployment rate, it continues to be elevated,” she said. “Moreover, both the share of the labor force that has been unemployed for more than six months and the number of individuals who work part-time but would prefer a full-time job are at historically high levels.”
Inflation has continued to be low even as the economy expands, Ms. Yellen said. But the reasons for low inflation—such as declines in non-oil import prices—are likely to be temporary, she added.
Inflation that persistently hovers below 2 percent could pose risks to economic performance, Ms. Yellen said, and the Federal Open Market Committee continues to monitor inflation developments closely.