Speaking in Cleveland, Fed chair Janet Yellen said that although the job market needs to improve first, she felt confident that the Fed would start “normalizing” monetary policy this year. If so, it would be the Fed’s first rate hike since 2008.
“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 said. “But I want to emphasize tht 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 added.
Interest rates will almost certainly rise before the year is out, the head of the Federal Reserve said today.