But she stopped short of offering any timetable. She pointed to steady gains in employment and strength in consumer spending.
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“I believe the case for an increase in the federal funds rate has strengthened in recent months”, Yellen said in a speech at the Fed’s annual monetary policy conference in Jackson Hole, Wyoming.
They moved lower again on renewed bets on a December rate increase. Instead, she stressed, as she frequently has, that the Fed’s rate decisions will depend on whether the freshest economic data continues to confirm its outlook.
“While economic growth has not been rapid, it has been sufficient to generate further improvement in the labor market”, she said. AT&T and Verizon each fell 1 per cent.
“For these reasons, the range of reasonably likely outcomes for the federal funds rate is quite wide”.
The Fed raised interest rates last December for the first time in almost a decade.
Since exiting the recession in the summer of 2009, the USA economy has been growing sluggishly, making it the slowest recovery since World War II.
Some economists have said they think conditions are ripe for the Fed to boost rates next month.
“The risk for dollar/yen is clearly to the downside after Yellen’s speech”, said Ron Simpson, managing director of global currency analysis at Action Economics in Tampa, Florida.
YELLEN UPBEAT: Federal Reserve Chair Yellen said in a speech that the Fed is moving toward raising interest rates in light of a solid job market and an improved outlook for the USA economy and inflation.
“If we do wait too long, what happens is eventually the economy creates imbalances or overheats and we get into situations somehow where we have to react to that and when we react to that, that often leads to a recession or some other bad outcome”, Williams said.
Perhaps helping the turn of sentiment were comments on CNBC from Fed Vice Chair Stanley Fischer suggesting the central bank could raise rates twice before year’s end, instead of once in December as many investors had been expecting.
U.S. Treasuries slumped as investors evaluated whether the Fed is likely to raise rates in September.
She devoted much of her speech to outlining how the Fed may deal with future recessions now that many economists and Fed officials believe that an aging population and other dynamics appear to be slowing US economic growth over the long term.
She, however, also said that future rate increases should be “gradual”.
“If you decide that we’re at maximum employment now and you intentionally slow down the economy, you’ll be leaving us behind, pulling up the ladder right after you’ve climbed it”, Adams said. She said efforts need to be made, in particular, to boost the productivity of USA workers.
Oanda senior market analyst Craig Erlam said Yellen’s words at Jackson Hole today did not necessarily “offer much in the way of surprises but it did confirm one thing, there is now a clear and public hawkish consensus building within the Fed and chair Yellen is on board”.
In advance of this week’s symposium, members of the Federal Open Market Committee, the Fed’s policy body, met with activists who charge that the leadership of regional reserve banks is dominated by wealthy white men drawn from the financial sector and that rate hikes would cause wages to stagnate for working and minority communities.
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In advance of Yellen’s speech Friday, George, Fischer and eight other Fed officials met Thursday with about 120 activists from the Campaign for Popular Democracy’s Fed Up coalition.
