The US Federal Reserve will stick to its plan to modestly increase interest rates, despite potential risks to the economy stemming from low oil prices and a slowdown in Chinese growth, dpa cited Chairwoman Janet Yellen as saying, on Wednesday. "Foreign economic developments, in particular, pose risks to US economic growth," Yellen told a congressional finance committee. While the Fed does not forecast a sharp downturn in China's growth, the valuation of the Chinese Yuan has recently led to uncertainty about China's economy, Yellen said. "Low commodity prices could trigger financial stresses in commodity-exporting economies, particularly in vulnerable emerging market economies, and for commodity-producing firms in many countries," she said. "Should any of these downside risks materialize, foreign activity and demand for US exports could weaken and financial market conditions could tighten further," the central bank head said. But she noted that continued progress in the US labor market along with higher wages offered positive signals about private consumption. The Fed "expects that with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace in coming years and that labor market indicators will continue to strengthen," Yellen said.
