Fed calls for gradual rate hike

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WASHINGTON The US economy remains strong and the strength of the labour market calls for continued gradual increases in interest rates despite subdued inflation, Federal Reserve chair Janet Yellen said yesterday.

"We will be paying close attention to the inflation data," she said at a seminar in Washington.

The US central bank voted to hold interest rates steady at its policy meeting last month.

Since then, Ms Yellen has acknowledged rising uncertainty on the path of inflation, which has been retreating from the Fed's 2 per cent target rate.

Minutes from the meeting showed policymakers had a debate about soft inflation and the impact on interest rates if it fails to rebound.

But Ms Yellen and other key policymakers have made clear they expect to gradually raise rates given theeconomy's strength and tightening of the labour market.


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