Janet Yellen Says the Fed Could Raise Rates ‘in the Coming Months’
Fed chairwoman doesn’t point to a particular central bank meeting for the next rate increase
CAMBRIDGE, Mass.—Federal Reserve Chairwoman Janet Yellen said Friday a rate increase would be appropriate “probably in the coming months” if the economy and labor market continue to strengthen.
During a panel discussion at the Radcliffe Institute for Advanced Study at Harvard University, Ms. Yellen reiterated that she believes rates should be raised slowly.
“It’s appropriate, and I’ve said this in the past I think, for the Fed to gradually and cautiously increase our overnight interest rate over time, and probably in the coming months such a move would be appropriate,” she said.
Ms. Yellen’s comments echoed those of her colleagues on the Fed’s rate-setting committee, several of whom have said in recent days they foresee two or three rate increases this year, with the next increase possible as soon as the Fed’s next meeting June 14-15.
Ms. Yellen didn’t point to a particular meeting, but her comments will give an additional boost to expectations that the Fed is getting closer to another policy move.
U.S. stocks pared some of Friday’s gains after Ms. Yellen’s remarks, with the Dow Jones Industrial Average recently up 13 points to 17841 and the S&P 500 up 0.2%. The dollar extended gains after her comments. The WSJ Dollar Index was up about 0.5% in recent trading, compared with a gain of 0.3% before Ms. Yellen’s talk.
In a March 29 speech to the Economic Club of New York, the Fed chief argued that global economic and financial uncertainty justified a slower path of interest-rate increases.
“Given the risks to the outlook, I consider it appropriate for the committee to proceed cautiously in adjusting policy,” Ms. Yellen said then.
When Fed officials met at the end of April, many of them said they believed those risks had receded and thought the Fed should keep its options open for a rate increase in June, according to minutes from the meeting. They also sought to push back against falling market expectations for a summer rate rise.
Those Before Ms. Yellen’s remarks Friday, traders in futures markets put a 30% probability on an increase at the June meeting, and a 58% probability on an increase by July.
The Fed raised its benchmark federal-funds rate in December to a range between 0.25% and 0.50%, after leaving it near zero for seven years. At the time, officials projected they would raise rates by a full percentage point this year, but officials cut that estimate in half at their March meeting.