Yellen: Interest-rate hikes coming soon
WASHINGTON — Federal Reserve Chair Janet Yellen signaled yesterday that the Fed will likely resume raising interest rates later this month to reflect a strengthening job market and inflation edging toward the central bank’s 2 percent target.
Yellen also said in a speech in Chicago that the Fed expects steady economic improvement to justify additional rate increases. While not specifying how many rate hikes could occur this year, Yellen noted that Fed officials in December had estimated that there would be three in 2017.
Yellen’s signal of a likely rate hike this month reflects an encouraging conclusion by the Fed: That nearly eight years after the Great Recession ended, the U.S. economy has finally regained most of its health. At a separate appearance yesterday in New York, Vice Chair Stanley Fischer added his voice to a series of Fed officials who have indicated this week that they would likely favor raising rates at the Fed’s next meeting March 14-15.
Many economists now say that barring an unexpectedly disastrous monthly jobs report next Friday, a Fed rate increase this month appears certain.
At the March 14-15 meeting, Yellen said the Fed’s policymakers will “evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate.”
Yesterday’s remarks from Yellen and Fischer echoed those made earlier this week by several other Fed officials.
What has shifted the sentiment of most Fed officials decisively toward a rate increase has been a wave of robust economic data — notably on job growth, manufacturing and consumer confidence — along with surging stock prices.