Yellen signals rate hike on tap
Increase likely at March 14-15 meeting
Federal Reserve Chair Janet Yellen signaled Friday that an interest rate hike is likely this month, the latest in a flurry of recent statements by Fed officials that suggest a move is all but certain.
She reiterated the pace of rate increases is likely to speed up over the next few years.
“At our meeting later this month, the Committee 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,” Yellen said in Chicago.
While Yellen couched her remark in conditional terms that depend on economic data, she preceded it by citing a job market that has been “strengthening” and inflation that has been “rising toward our target” of 2% annually.
Several other Fed officials in recent days have indicated the Fed’s policymaking committee is likely to raise its benchmark short-term rate at its March 1415 meeting.
Fed Governor Lael Brainard, known as a “dove” who often prefers to keep rates low to stimulate growth, said the economy can handle a rate hike “soon.”
And New York Fed Chief William Dudley said the case for a rate increase has become “a lot more compelling.”
Fed fund futures markets now figure there’s an 82% chance the Fed will act this month, up from about 20% a couple of weeks ago.
Economists say next Friday’s jobs report could be pivotal in solidifying a decision to raise rates this month, though it likely would take both unusually weak payroll gains and a second consecutive month of sluggish wage growth to prompt Fed officials to seriously consider holding off. The report is expected to show employers added 185,000 jobs in February.
In December, the Fed lifted its benchmark fed funds rate by a quarter percentage point to a range of 0.5% to 0.75%, its second hike in the past decade.