Yellen: Fed Likely To Raise Interest Rates Soon

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Chairwoman of the Federal Reserve Bank Janet Yellen signaled Friday morning that the Fed will likely raise interest rates in March if economic data holds up.

The Fed announced in late February that it would not raise rates in the near future. The central bank said the committee decided to “maintain the target range for the federal funds rate at 1/2 to 3/4 percent.” Fed economists stated the decision to keep the funds rate steady came after the economy did not meet the goal of 2 percent inflation set last December.

Yellen’s comments Friday, however, illustrate that the Fed could be rethinking its approach.

At our meeting later this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate,” Yellen told reporters Friday in Chicago.

The fed is concerned about the federal funds rate, which is the overnight rate on loans between banks. It is effectively the single most influential interest rate in the U.S. economy, as it has widespread affects on domestic monetary and financial conditions. The fed rate bears on employment, economic growth, and inflation.

The Fed’s decision will likely come at around the same time the Labor Department releases its monthly non-farm payrolls report on Mar. 10. Traders are betting at 3-to-1 odds that the Fed will raise rates next month, Reuters reports.


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