Clear Sailing Ahead: Fed's Yellen Says No Short-Term Obstacles For U.S. Economy

U.S. Federal Reserve Chair Janet Yellen said on Thursday there are no serious short-term obstacles that could derail the economic momentum.

According to a Bloomberg report, Yellen emphasized the fact that the U.S. unemployment rate has reached a low level while the labor market is strong and wage growth is picking up. Moreover, inflation has inched up from a very low level and stands just below the central bank's 2 percent target.

2 Longer-Term Obstacles

The Fed chair also justified the decision to boost interest rates last month for the first time in a year to 0.75 percent from 0.5 percent. She argued that near-term risks to the economic outlook "appear roughly balanced," which may pave the way for up to three further interest rate hikes throughout 2017.

Yellen did, however, acknowledge that there are at least two longer-term challenges ahead that need to be addressed: low productivity and the growing inequality gap.

Productivity remains at low levels, and this metric serves as a "key determinant" of living standards over the longer term. In fact, economists can't explain why exactly productivity remains at depressed levels.

In terms of low productivity, Yellen suggested that a greater share of income gains is being collected by higher educated workers which causes the income inequality gap to widen.