March 3 (UPI) — Federal Reserve Chairwoman Janet Yellen indicated Friday that the U.S. central bank will probably raise key interest rates, for the second time in three months, at its next policy meeting this month.
Yellen made the remarks Friday at the Executives’ Club of Chicago.
“At our meeting later this month, the Federal Open Market 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,” she said.
Similar language in the past has typically preceded a boost to the federal funds rate. The only new relevant information due between now and the two-day meeting’s start on March 14, to factor into the board’s decision, is the nonfarm payrolls report on March 10.
During her speech, Yellen outlined the Fed’s policy strategy for much of the past decade, since the financial crisis and Great Recession.
“The Federal Open Market Committee has made significant tactical adjustments along the way,” she said. “Looking ahead, we continue to expect the evolution of the economy to warrant further gradual increases in the target range for the federal funds rate. However, given how close we are to meeting our statutory goals, and in the absence of new developments that might materially worsen the economic outlook, the process of scaling back accommodation likely will not be as slow as it was in 2015 and 2016.”
If the Fed raises rates on March 15, it would be the third hike in 15 months and the first of three expected increases for 2017. The federal funds rate remained near zero for several years as the U.S. economy recovered from the financial crisis, Rates were finally moved in December 2015 and again 12 months later.
“The U.S. economy has exhibited remarkable resilience in the face of adverse shocks in recent years, and economic developments since mid-2016 have reinforced the Committee’s confidence that the economy is on track to achieve our statutory goals,” Yellen said Friday.
One of the main measures the Fed committee looks for when evaluating further hikes is the rate of inflation. The FOMC likes to see the rate at 2 percent, and although inflation has consistently remained below that threshold, other positive factors have been overcompensating enough to warrant movement of the federal funds rate, in the Fed’s estimation.
“In short, we currently judge that it will be appropriate to gradually increase the federal funds rate if the economic data continue to come in about as we expect,” Yellen said Friday.