Fed: December interest rate hike a 'live possibility'

ANKARA

Federal Reserve governor Janet Yellen told Congress on Wednesday that a December rate hike was a "live possibility".

The Turkish lira reacted on the statement, going from about 2.83 to the dollar to about 2.86.

Testifying before the House Financial Services Committee, Yellen said that, if economic data supported it, the Fed would raise interest rates at the next monetary policy meeting in December.

But she warned that no decision had yet been made.

At its last meeting in October, the Federal Open Market Committee held interest rates at near-zero levels. At that time, the minutes of the meeting showed that there was concern among Fed board members about the pace of economic recovery in the U.S.

The inflation outlook, in particular, was not strong enough to justify a rate hike at that time, the minutes said.

Yellen also told Congress that U.S. banks had substantially increased their capital reserves, but noted that they still had substantial compliance and regulatory issues to resolve before being declared healthy.