Yellen Says Rate Increase Possible in December
November 04 2015 - 11:10AM
Dow Jones News
WASHINGTON—Federal Reserve Chairwoman Janet Yellen said the U.S.
central bank may raise short-term interest rates at its
mid-December meeting, but emphasized no decision has yet been
made.
The Fed expects "the economy will continue to grow at a pace
that's sufficient to generate further improvements in the labor
market and to return inflation to our 2% target over the medium
term, and if the incoming information supports that expectation,
then our statement indicates that December would be a live
possibility," Ms. Yellen said Wednesday while testifying before the
House Financial Services Committee. "But importantly, we've made no
decision about it."
The Fed has kept its benchmark short-term interest rate, the
federal-funds rate, pinned near zero since December 2008. Ms.
Yellen said in late September that she and most other policy makers
"anticipate that it will likely be appropriate to raise the target
range for the federal-funds rate sometime later this year and to
continue boosting short-term rates at a gradual pace thereafter as
the labor market improves further and inflation moves back to our
2% objective."
Ms. Yellen said Wednesday that "moving in a timely fashion, if
the data and the outlook justify such a move, is a prudent thing to
do because we will be able to move at a more gradual and measured
pace. We fully expect that the economy will evolve in such a way
that we can move at a very gradual pace, and of course, after we do
so, we will be watching very carefully whether our expectations are
realized."
Referring to recent remarks by Fed governor Lael Brainard on the
subdued state of U.S. inflation, Ms. Yellen told lawmakers that "if
we were to move, say in December, it would be based on an
expectation -- which I believe is justified -- that with an
improving labor market and transitory factors fading, that
inflation will move up to 2%. But of course if we were to move, we
would need to verify over time that expectation was being realized,
and if not, adjust policy appropriately."
The Fed's policy-setting committee decided to hold rates near
zero at a closely watched meeting in mid-September but signaled in
its late October policy statement that a rate increase was possible
"at its next meeting" on Dec. 15-16.
CME Group said Tuesday, ahead of Ms. Yellen's testimony, that
fed-funds futures suggested a 52% probability of a rate increase in
December.
Other top Fed officials may add to Ms. Yellen's comments later
Wednesday. Federal Reserve Bank of New York President William
Dudley is set to speak Wednesday afternoon at a press briefing in
New York, and Fed Vice Chairman Stanley Fischer will deliver a
speech Wednesday evening at the Canadian embassy in Washington.
Write to Ben Leubsdorf at ben.leubsdorf@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 04, 2015 11:55 ET (16:55 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
CME (NASDAQ:CME)
Historical Stock Chart
From Jun 2024 to Jul 2024
CME (NASDAQ:CME)
Historical Stock Chart
From Jul 2023 to Jul 2024