Yellen says Fed rate hike likely appropriate

C A M BR I D GE , M A S S . • The U.S. Federal Reserve should raise interest rates “in the coming months” if the economy picks up as expected and jobs continue to be generated, U.S. central bank chief Janet Yellen said on Friday, bolstering the case for a rate increase in June or July.

“It’s appropriate ... for the Fed to gradually and cautiously increase our overnight interest rate over time, and probably in the coming months such a move would be appropriate,” Yellen said during an appearance at Harvard University.

Although Yellen expressed caution about too steep a rise in U.S. interest rates, she sounded more confident than she has in the past about economic growth and the prospect of inflation edging higher toward the Fed’s two-per-cent target.

“The economy is continuing to improve ... growth looks to be picking up,” Yellen told a group of professors and alumni at the Ivy League college in Cambridge, Mass. She added that she expects the labour market to continue to improve.

Prices for U.S. Treasuries fell after Yellen’s remarks, while stocks rose. The U.S. dollar was trading higher against a basket of currencies.

The probability of a rate hike at the Federal Open Market Committee’s June 14-15 meeting rose to 34 per cent from 30 per cent before Yellen’s remarks, according to CME Group, where the futures contracts are traded.

Bets on a rate increase at the July 26-27 policy meeting hit 60 per cent.

The Fed raised its key benchmark interest rate in December for the first time in nearly a decade, but has held off since then due to concerns earlier this year about a global economic slowdown and financial market volatility. Those concerns have subsided somewhat in recent months.

Weak oil prices and a strong dollar have been blamed for helping to keep U.S. inflation below the central bank’s target.

Yellen said those factors “seem like they are roughly stabilizing at this point and my own expectation is that ... inflation will move back up over the next couple of years.” of Argentina, or CEFIDAR. That number is likely to have increased to US$500 billion, or about the same as its annual gross domestic product, according to Jorge Gaggero, founder of the Tax Justice Network for Latin America and the Caribbean.

Argentina will hope to emulate Chile, where a similar amnesty last year collected US$1.5 billion in revenue, more than 10 times the amount forecast. Brazil started its own similar plan last month. Prat-Gay declined to estimate how much Argentina would raise, though he said it would be less than the figure of about US$60 billion reported by local media.