Interest rate likely to rise this month
WASHINGTON — Federal Reserve Chair Janet Yellen signaled Friday 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 Friday 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.
Asked whether there had been a conscious effort by Fed officials to signal a probable rate hike at that meeting, Fischer said, “If there has been a conscious effort, I’m about to join it.”
Many economists now say that barring an unexpectedly disastrous monthly jobs report next Friday, a Fed rate increase this month appears certain.
“The Fed will hike unless next week’s payroll report is calamitous,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “That’s unlikely, so we expect rates to rise.”
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.”