Yellen Says Rates Need to Rise

Janet Yellen’s remarks for today indicate that she sees rates going up, but she’s less clear on when:

Federal Reserve Chair Janet Yellen said positive forces supporting U.S. job growth and higher inflation will still probably outweigh negative developments, calling additional gradual interest-rate increases appropriate without specifying their precise timing.

“I continue to think that the federal funds rate will probably need to rise gradually over time to ensure price stability and maximum sustainable employment in the longer run,” Yellen said, according to the text of a speech she is scheduled to deliver Monday in Philadelphia.

Yellen was less specific than in her previous remarks in describing when she thought the Fed should raise rates again. On May 27 at Harvard University, she said an increase would likely be appropriate in “coming months,” a phrase omitted from Monday’s speech text. Since then, the Labor Department on Friday reported U.S. employers in May added the fewest number of new jobs in almost six years, causing expectations for a rate increase to plunge.

The May employment numbers were “disappointing,” she said, while also pointing to one of the few encouraging elements of the report — the increase in average hourly earnings.

Posted by on June 6th, 2016 at 12:53 pm


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.