The jobless rate is still too high and inflation is still too low to think about hiking interest rates, Federal Reserve chief Janet Yellen said Wednesday.
The recently named Fed chief says the American economy is improving slowly, but the jobless rate still remains "far from satisfactory" and therefore not enough to consider raising rates closer to levels they've historically been at.
Speaking to Congress' Joint Economic Committee, Yellen said she expects low borrowing rates will continue to be needed for a "considerable time."
The comments are in keeping with earlier pronouncements from the Fed that the central bank is in no rush to raise its key target for short-term interest rates at a record low near zero, where it has been since December 2008.
"While conditions in the labour market have improved appreciably, they are still far from satisfactory," Yellen said. "Even with recent declines in the unemployment rate, it continues to be elevated."
Internationally, Yellen said geopolitical tensions in Syria and Ukraine remain a concern for the U.S. economy. As does the still wobbly housing market inside America's borders.
Wednesday's speech was Yellen's first chance to speak since numbers emerged last week that showed the job market cranked out a very healthy 288,000 new jobs in April, the biggest figure in two years. The jobless rate also dropped four percentage points to 6.3 per cent, the lowest level it's found since 2008.
Those numbers were enough to compel the Fed to taper its bond-buying program last week. The Fed had been buying $85 billion US a month worth of bonds to boost the money supply, but that figure has now been tapered down by almost half to $45 billion.
In its statement last week, the Fed reiterated its expectation that short-term rates would remain near zero for a "considerable time" after the bond-buying program ends. Yellen repeated that language Wednesday.
"Many Americans who want a job are still unemployed, inflation continues to run below (the central bank's) longer-run objectives and work remains to further strengthen our financial system," she said.
After last week's numbers, America's work force — the proportion of Americans who either have a job or are looking for one — has reached a three-decade low.
Economists think the earliest America might see higher rates is the first half of 2015, and Wednesday's comments by Yellen offer little reason to alter that expectation.
Yellen said that as the Fed decides when to start raising rates it would focus on the health of the job market and whether inflation, now well below the Fed's two per cent target, is on track to return to that level.