Economic and monetary conditions are in line with Federal Reserve officials’ expectations for an interest rate hike when the Federal Open Market Committee meets on March 15, Fed Chairman Janet Yellen said at an event in Chicago today. “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,” she said.
She added that she expects rate hikes to accelerate in 2018 following a slow pace, with just two quarter-point increases since the federal funds rate dipped to near-zero in 2008: one in late 2015 and another in late 2016. “Unless unanticipated developments adversely affect the economic outlook, the process of scaling back accommodation likely will not be as slow as it was during the past couple of years,” Yellen said.
Yellen echoed other comments from top Fed policymakers. Earlier this week, Fed Governor Lael Brainard emphasized that current progress means “it will likely be appropriate soon to remove additional accommodation, continuing on a gradual path.”
In February, Governor Jerome Powell noted that “we appear to be close to our employment objective, and are nearing our inflation objective” and that “risks now seem to me to be more in balance. Going forward, I see it as appropriate to gradually tighten policy as long as the economy continues to behave roughly as expected.” Two regional Fed presidents also made statements leaning toward a faster pace of rate hikes.