Hike in Interest Rates ‘Likely Appropriate’ in March, Says Yellen

A hike in the U.S. interest rate is likely to happen this month, according to Federal Reserve Chairwoman Janet Yellen.

“At our meeting later this month, the Federal Open Market 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 said in a speech to The Executives’ Club of Chicago.

“My colleagues and I generally anticipate that the neutral real federal funds rate will rise to its longer-run level over the next few years. This expectation partly underlies our view that gradual increases in the federal funds rate will likely be appropriate in the months and years ahead.”

Yellen noted that the increases would keep the economy from significantly overheating, thereby sustaining the expansion and maintaining price stability.

In her speech, Yellen also indicated a faster pace of rate hikes. “Given how close we are to meeting our statutory goals, and in the absence of new developments that might materially worsen the economic outlook, the process of scaling back accommodation likely will not be as slow as it was in 2015 and 2016,” she said, when the central bank made one hike each year.

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