Yellen faces tough sell on Fed rate hikes in Congress

[WhiteTara]

http://in.reuters.com/article/usa-fed-yellen-idINKCN0VI1ZH

Federal Reserve Chair Janet Yellen will defend the U.S. central bank's first rate hike in a decade and likely insist that further rises this year remain on track, albeit at a slower pace, when she addresses Congress on Wednesday.

Yellen, who is certain to be grilled by lawmakers on whether the economy really is ready for higher rates, will point to continued strong jobs growth even as financial markets have all but priced out any rate hikes this year and as signs of stress in the global financial system have re-emerged amid volatile markets.

The Fed Chair also is likely to find herself in heated exchanges with lawmakers over the bank's perceived secrecy, with presidential candidates from both sides of the aisle now taking regular shots at the Fed on the campaign trail.

"I think that markets probably have over-reacted to the sense that the Fed won't raise rates any time soon," said Vincent Reinhart, visiting scholar at the American Enterprise Institute and former head of the Fed's monetary affairs division.

The House Financial Services Committee hearing is set for 10 a.m. EST (1500 GMT) on Wednesday, followed on Thursday at 10 a.m. EST by a Senate Banking Committee hearing.