Now that the US is closing in on full employment and inflation is likely to rise to target levels, the “next step” should be to start gradually increasing rates, a top US central banker said at the weekend.

JANET YELLEN, President Barack Obama’s pick to lead the Federal Reserve, combines a solid reputation as an economist with a keen interest in communication — fitting for someone who once joked that her dinner guests should expect a discussion of economics.

FEARS of rising inflation and higher interest rates triggered a share sell-off across Europe yesterday wiping billions of euro off market values.