Yellen, answering questions at a Harvard University event where she received an award, made comments that were similar to what her colleague, Fed Gov. Jerome Powell, made on Thursday.
Advertisement
Despite yesterday’s news that growth of the USA economy in the first quarter was revised up but not as much as consensus expected, there has been a series of upbeat data releases from the United States which have provided enough justification for a interest rate hike.
“Growth looks to be picking up from the various data that we monitor, and if that continues and if the labor market continues to improve – and I expect those things will occur”, then it would be appropriate to raise rates, Yellen said.
Dr Yellen flagged the Fed was likely to “gradually and cautiously” increase interest rates, “and probably in the coming months such a move would be appropriate”.
Yellen suggested that a move in the coming months would likely be appropriate, rounding out two weeks of Fed rate-hike comments that have increased speculation the Federal Open Market Committee, the central bank’s monetary policy panel, will act in June.
Yellen’s June 6 speech should provide the Fed chair with a much better opportunity to spell out her views ahead of the next FOMC meeting than today’s venue did with its question and answer format, said Stephen Stanley, chief economist at Amherst Pierpont Securities LLC in NY.
“It sounds like the committee is close to a rate hike, assuming the data hold up, but that no decisions have been made about the precise timing”, Laura Rosner, a senior USA economist at BNP Paribas in NY, said in an email.
The Fed next meets on June 14-15.
The US dollar and world stock indexes edged higher yesterday ahead of a speech by Federal Reserve Chair Janet Yellen that could provide new signals on the timing of a US interest rate hike.
At 2:48 pm, the Dow Jones industrial average was up 0.08 percent at 17,843.22 points and the S&P 500 had gained 0.22 percent to 2,094.62.
The dollar has climbed to over a 2-month high of $1.1110 against the Euro this afternoon, from a low of around $1.12 this morning.
Data on Friday showed U.S. economic growth slowed in the first quarter, although not as sharply as initially thought.
In the foreign exchange market, the dollar index rose 0.60 percent to 95.745, the highest level since March 29. “Admittedly, other factors contributed to the decline, but history is rhyming, and we think a rate hike this summer could drive some downside”, stated the Bank of America strategist.
Previously, though, the Federal Reserve chairwoman said she expected two rate increases in 2016. Durable goods orders, retail sales, housing construction and weak inflation have strengthened. The Atlanta Federal Reserve is now estimating second-quarter GDP rising at a 2.9% rate. “It is important to be cautious. because if we were to trigger a downturn or to contribute to a downturn, we would have limited scope for responding”, Ms Yellen said.
Advertisement
You have left for this month.
