Yellen Says Low Inflation Could Lead to Slower Pace of Rate Rises

Federal Reserve Chairwoman Janet Yellen on Tuesday defended the central bank's projection for a gradual path of interest-rate increases over the next few years even though she said low inflation, if it persists, could lead to a slightly slower pace of rate rises.

Ms. Yellen and her colleagues have been grappling with subdued inflation growth for much of the year despite a growing economy and vigorous labor market. That has presented officials with a dilemma. From one point of view, the weak inflation readings could be a sign that interest rates should remain lower than anticipated. Yet keeping interest rates low for too long could cause inflation to grow too rapidly and inflate new financial bubbles.

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Write to David Harrison at david.harrison@wsj.com

(END) Dow Jones Newswires

September 26, 2017 13:01 ET (17:01 GMT)