A gradual path of rate increases is likely to remain warranted, Federal Reserve Board Chair Janet Yellen reiterated Wednesday, noting that she is “personally concerned” about U.S. debt level.

Federal Reserve Board Chair Janet Yellen
Federal Reserve Board Chair Janet Yellen Bloomberg News

“I will say, and this is nothing new, it's something I've been saying for a long time, I am personally concerned about the U.S. debt situation,” Yellen said in a press conference. “It's not that the debt to GDP ratio in the, at the moment, is extraordinarily or worrisomely high. But it's also not very low. It's projected as the population continues to age and the baby-boomers retire, that that ratio will continue to rise in a unsustainable fashion.”

As for unfinished business, Yellen pointed to the Fed’s failure to get inflation to 2%.

While admitting the yield curve has flattened, reflecting higher short-term rates, Yellen said the "current slope is well withing its historical range" and while the yield curve may invert, most market participants are not worried about recession.

In its meeting, the Federal Open Market Committee discussed tax policy, she noted, and “most of my colleagues factored in the prospect of fiscal stimulus along the lines of what is being contemplated by Congress into their projections.”

However, she said, some have been incorporating expected changes for a while.

Tax changes, she said, should “provide a modest lift to GDP growth in coming years.”

While the Fed has “characterized the general level of asset valuations as elevated,” Yellen said, “the fact that those valuations are high doesn't mean that they are necessarily overvalued.” She said the rising stock market is not considered a major risk to the financial system.

She said the Fed hasn’t considered using negative interest rates.

When asked, Yellen refused to identify which dot on the dot plot is hers.

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