U.S. Fed chair gives upbeat view on economy before the Congress

U.S. Federal Reserve chairwoman Janet Yellen on Thursday gave an upbeat assessment of the U.S. economy before lawmakers, signaling an interest rate hike likely in December.

Yellen's testimony before the Joint Economic Committee of the U.S. Congress on Thursday is roughly identical to her speech on Wednesday. On both occasions, Yellen repeated that "U.S. economic growth is likely to be sufficient over the next year or two to result in further improvement in the labor market" and her confidence in a return of inflation to the central bank's 2 percent target.

Although the Fed chair did not indicate whether to raise interest rates this month or not, she mentioned that the economy is performing as expected, signaling the conditions necessary for an interest rate increase have been met.

In her testimony, Yellen reiterated that "even after the initial increase in the federal funds rate, monetary policy will remain accommodative," emphasizing a slow and gradual path for the monetary policy tightening cycle.

Analysts believed that Yellen's statements in recent days could be seen as a sign that she is ready to raise interest rates later this month, preventing a surprise in markets or the economy. Investors were already expecting the Fed would lift the benchmark rate this month from current 0 to 0.25 percent range where it has held since 2008.

In the question and answer session with lawmakers, Yellen stated her assessment of the Chinese economy and currency, saying that China is trying to rebalance its economy from investment-driven to consumption-led model, and that the reasons for the slower growth are "understandable."

In regard to the Chinese currency, Yellen said that, despite the deprecation in the last summer, the Renminbi "has been strengthening rather substantially relative to many of its trade partners." Enditem