Federal Reserve Chairwoman Janet Yellen continued to stir speculation on another federal funds rate increase this year by suggesting the argument supporting this action has grown stronger.
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Fischer, speaking in an interview with CNBC at Jackson Hole, said “the evidence is that the economy has strengthened”.
Although US government data earlier on Friday showed the economy growing only sluggishly in the second quarter, Yellen said a lot of new jobs were being created and economic growth would likely continue at a moderate pace.
Still, Yellen declined to hint at whether the Fed might raise rates at its next policy meeting, September 20-21, or at its subsequent meetings in early November and mid-December. Belisle said the majority of investors expecting a raise in the rate before the end of the year.
But other economists have said they think December remains a more likely time for a resumption of rate increases.
She contended that the Fed’s toolkit has proven effective, as the central bank was able to adequately manage its rate target since raising rates in December.
Yellen’s speech comes after some colleagues have been fairly upbeat in their assessments of the economy, which could mean they’re eager to lift rates in the coming months.
Craigs Investment Partners head of private wealth research Mark Lister said a rise in United States interest rates would cause some volatility.
The case for a USA interest rate hike has strengthened in recent months because of improvements in the labour market and expectations for solid economic growth, Federal Reserve chair Janet Yellen said on Friday. The Fed will meet on September 19-20.
The markets were satisfied by the lack of surprises in Yellen’s remarks, said Tim Drilling, regional investment director of U.S. Bank’s Private Client Reserve.
Her comments sent the pound surging more than 0.5% to 1.326 against the U.S. dollar.
Minh Trang, a senior currency trader at Silicon Valley Bank in California, said: ‘The overall takeaway not just from Yellen but for the week is that all the Fed officials have all taken a hawkish bent.
She added that the Fed still thinks future rate increases should be “gradual”.
Such a view is “exaggerated”, Yellen said, because the Fed will be able to buy bonds and make pledges about future policy to lower interest rates.
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In December, the Fed raised its benchmark rate modestly in response to a brighter economic picture, notably a job market nearing full health.
