The head of the U.S. central bank says the American economy faces some global threats that could hurt growth.  Some analysts interpret her remarks as a signal that the Federal Reserve may delay further interest rate increases.

In remarks to a congressional committee Wednesday, Federal Reserve Chair Janet Yellen said uncertainty about China’s currency policies and its economic prospects have contributed to “increased volatility in global markets.”

Key stock market indexes in Europe and the United States were mostly higher as investors assessed Yellen’s comments.

Hard times for commodities exporting countries

Yellen says worries about growth and a glut of crude oil and other commodities on global markets contributed to the recent fall in oil prices. She says that could “trigger financial stresses” in the many nations that depend on commodity exports.  

Slowing foreign economies, and the very strong U.S. dollar, also hurt demand for U.S. exports and crimp economic growth.  

The Fed chief said the U.S. economy has been “less supportive” of growth recently, but added these factors are likely to ease in the “medium term.”  

She says the U.S. job market continues to improve and that the overall economy is expanding at a “moderate” pace.  

Delay in rate increases likely

Back in December, top officials of the Federal Reserve voted to increase the key U.S. interest rate from near zero to half of a percent.  Fed officials are working to raise rates from the emergency low levels imposed to bolster the economy during the recession to levels consistent with historic averages.  At that time, many analysts said the Fed would probably raise rates four times this year; but now, most economists say the Fed is likely to delay any more rate increases, and might not make any this year.

Low rates help boost economic growth, but if they are held too low too long, they might spark inflation that could damage the economy. 
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