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Fed Chief Preaches Patience on Raising Borrowing Costs

/ Source: Associated Press

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Too many Americans are still not working, wage growth is sluggish and inflation remains tame, so the Federal Reserve is going to keep interest rates at historic lows for a while longer, the central bank's chief said Tuesday.

In her semiannual economic report to Congress, Janet Yellen told lawmakers that the Fed's continuing use of the word "patient" means a rate hike is unlikely for at least the next two meetings. The Fed has kept its benchmark rate near zero since 2008. Even if the Fed changes its language, Yellen said that will not necessarily translate to an imminent shift in monetary policy. Rather, it will indicate that the Fed can start considering rate hikes on a "meeting-by-meeting basis."

Her remarks come at a delicate time for the Fed. After winning praise for how she handled her first year as head of the central bank, Yellen is facing a tougher challenge this year. She must navigate a transition from record-low interest rates to a period when the Fed will start raising rates while trying to keep financial markets calm.

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