The rate had been kept at a record low near zero since the depths of the 2008 financial crisis.
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Meanwhile, Cleveland Fed President Loretta Mester on Friday on CNBC echoed the recent hawkish sentiments of other Fed members, saying “it makes sense” to start moving interest rates higher.
The head of America’s central bank said the case for an interest rate hike had strengthened but stopped short of indicating any timetable for a move.
Fed leaders have at times used the Jackson Hole event to announce major policy shifts. The Fed’s purchases were meant to shrink long-term loan rates to spur borrowing and spending.
Wall Street sees the chance of rate increase at the Fed’s September 20-21 meeting is 24%, up from 21% on Thursday, according to the CME Group’s FedWatch too (http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html) l.
THE QUOTE: “Who would think the Fed would raise interest rates two months before a very important election and with economic growth that has been back and forth and back and forth for years?” said Bruce Bittles, chief investment strategist at R.W. Baird.
Yellen said the jobs market is nearing full employment and inflation is ticking toward the Fed’s 2 percent goal, despite downward pressure from ‘the transitory effects of earlier declines in energy and import prices’.
But other economists have said they think December remains a more likely time for a resumption of rate increases.
“It was completely in line with most expectations”, Drilling said in an interview.
‘If they want to be gradual, they really do need to hike rates 25 basis points [0.25%] in September, ‘ he wrote in a note to investors. And global markets have quickly bounced back from the shock of the Brexit referendum, suggesting that external risks to the USA economic outlook may have been overplayed.
“Investors are not pricing in a Fed tightening”, Swonk said. “We still have uncertainty coming from overseas, and there are a lot of land mines out there”.
Yellen, speaking at an worldwide gathering of central bankers and academics in Jackson Hole did not say when the USA central bank would raise borrowing costs, and investors remained skeptical that such a move was imminent.
The conference’s theme is “Designing Resilient Monetary Policy Frameworks for the Future”, and Yellen may address whether the global economy has become trapped in a slump of low growth and low inflation and, if so, how central banks might respond.
The coalition said it wanted the Fed and Congress to consider changes in the makeup of the boards of directors of the 12 regional banks to promote more diversity among a group of officials that is mainly white and male and dominated by bankers.
The U.S. unemployment rate now rests at just 4.9 per cent. Next week’s publication of euro zone jobless data for July and August’s figures for consumer sentiment and inflation, slowly on the rise from anemic levels, come ahead of the next meeting of European Central Bank governors on Sept 8.
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Despite her clear signal that a rate hike was now more likely, Yellen cautioned that Fed decisions would depend on economic conditions that could vary widely.
