Yellen: rate hike in March “would likely be appropriate”
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Yellen: rate hike in March “would likely be appropriate”

According to Federal Reserve (FED) chairperson Janet Yellen, the central bank will probably raise interest rates this month. And it may end up raising them more than expected this year.

Speaking to The Executives’ Club of Chicago, she highlighted the dangers of a complacent central bank:

“We realize that waiting too long to scale back some of our support could potentially require us to raise rates rapidly sometime down the road, which in turn could risk disrupting financial markets and pushing the economy into recession.”

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With the next FED meeting scheduled for 14-15 March, Yellen told listeners that – should the economy remain on track – a March rates rise “would likely be appropriate.” Should it come to pass, it will be the first such hike of 2017. However, it will almost certainly not be the last.

Policy makers are expected to pursue three quarter percentage-point increases over the course of the year, according to the median projection in December’s forecast. But Yellen’s reevaluation of current monetary policy as “moderately accommodative” (from “modestly accommodative” in January) might indicate further raises.

Lou Cradall, chief economist at Wrightson ICAP LLC and veteran FED watcher, explained: “That’s a biggie. There’s a clear suggestion the FED may have to step up the pace of its rate increases.”

Disclosure
The opinions in this article do not reflect those of Dominion Fund Management Limited, and in the instance of any forward-looking statements, these should not be construed as advice.


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