In an appearance on Capitol Hill on Thursday, Federal Reserve Chairwoman Janet L. Yellen endorsed plans to raise interest rates gradually, and indicated that they would likely keep increasing through the end of 2021, despite signs that the economy is growing more quickly.
During a congressional hearing, Rep. Elijah E. Cummings, the ranking member of the House Committee on Oversight and Government Reform, told Ms. Yellen that an increase in mortgage rates that began in December is putting pressure on middle-class borrowers and being a concern for Baltimore Mayor Catherine Pugh.
Ms. Yellen replied that the Fed will continue gradually increasing interest rates, saying that the “comparatively low level of rates is helping households” recover from the crisis in 2008 and that the goal of the policy “is to continue to support growth and stability in the economy.”
Interest rates in the United States have stayed low since the crisis, in part because of worries that higher borrowing costs could hurt the economic recovery. A March 2 announcement from the Fed suggested that those concerns were still present, and suggested that borrowing costs would probably rise during the next few years.
Interest rates in other countries, by contrast, have been rising in anticipation of a stronger global economy.
“It is clear that the pendulum is swinging toward higher rates,” Rep. Cummings told Ms. Yellen. “How do you respond to that?”
Ms. Yellen said that “higher levels of rates” are “necessary to keep conditions in the economy strong enough to support growth and to support financial stability.”
Ms. Yellen’s term as head of the Fed expires at the end of February. Her replacement will almost certainly be nominated by President Donald J. Trump, who has a pattern of picking central bankers opposed to her more aggressive policy of raising interest rates. Ms. Yellen and former presidents George W. Bush and Barack Obama are friends.
“The Fed and the Trump administration have to build a better rapport,” Rep. Cummings said in an interview after the hearing. “If that can be done, we should be able to work together.”