Yellen: Recovering economy to lead to rate hikes

by Justin da Rosa16 Jul 2015
Janet Yellen maintains her belief that interest will be hiked later this year.

“Yellen seems very committed to raising rates and is doing everything she can to lessen the blow,” Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research told MarketWatch.

Yellen spoke before the Committee on Financial Services, U.S. House of Representatives Wednesday, noting continued economic progress.

“Since my appearance before this Committee in February, the economy has made further progress toward the Federal Reserve's objective of maximum employment, while inflation has continued to run below the level that the Federal Open Market Committee (FOMC) judges to be most consistent over the longer run with the Federal Reserve's statutory mandate to promote maximum employment and price stability,” Yellen said.

And just last week Yellen hinted that rates could increase this year.

“I expect it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy,” Yellen last Friday in Cleveland. “But I want to emphasize that the course of the economy and inflation remains highly uncertain.

“We will be watching carefully to see if there is continued improvement in labor market conditions, and we will need to be reasonably confident that inflation will move back to 2% in the next few years.”

She held that position Wednesday.

“We continue to anticipate that it will be appropriate to raise the target range for the federal funds rate when the Committee has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term,” Yellen said. “As always, the Federal Reserve remains committed to employing its tools to best promote the attainment of its dual mandate.”



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