AFP, CHICAGOUS Federal Reserve Chair Janet Yellen on Friday signaled an interest rate increase could be on the way this month — if US employment and inflation remain in line with expectations. The Fed last raised the federal funds rate in December last year — only the second increase in a decade — but Yellen's comments confirm the expectation of another move following recent statements from other Fed officials. "They'll hike this month unless payrolls are disastrous," Pantheon Macroeconomics chief economist Ian Shepherdson said. Analysts said her words were a clear sign that the central bank would raise the benchmark lending rate at the March 14 and March 15 policy meeting. The Fed would get to see one more employment report before they decide the direction of interest rates, when the US Department of Labor releases data for last month on Friday.
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Yellen said Fed officials are inclined to wait to see which measures are approved by Congress. Yellen also said in a speech in Chicago that the Fed expects steady economic improvement to justify additional rate increases. While not specifying how many rate hikes could occur this year, Yellen noted that Fed officials in December had estimated that there would be three in 2017. Yellen was asked during a question-and-answer period about the Fed's likely response to Trump's forthcoming economic stimulus program, the details of which remain unclear. Yellen's signal of a likely rate hike this month reflects an encouraging conclusion by the Fed: That nearly eight years after the Great Recession ended, the U.S. economy has finally regained most of its health.
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