Fed boss says US rates may rise in March

Fed boss says US rates may rise in March
Fed boss says US rates may rise in March
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A rise in US interest rates could be "appropriate" as soon as this month, according to the chair of the US Federal Reserve.

Janet Yellen said rate setters will evaluate whether employment and inflation remain in line with expectations when they meet in March.

Ms Yellen also suggested the central bank was likely to raise rates more quickly than over the past two years.

Rates went up by 0.25% in December, only the second increase in a decade.

The benchmark interest rate, the Federal Funds rate, now stands at 0.5%-0.75%.

Speaking to The Executives' Club of Chicago, Ms Yellen said: "We currently judge that it will be appropriate to gradually increase the federal funds rate if the economic data continue to come in about as we expect.

"Indeed, at our meeting later this month, 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."

However, she added, it was not a "preset course" and the Federal Open Markets Committee which sets rates "stands ready to adjust its assessment of the appropriate path for monetary policy if unanticipated developments materially change the economic outlook".

Gennadiy Goldberg, interest rate strategist at TD Securities, said: "[Janet] Yellen has given us the strongest signal that she could that a March rate hike is quite likely, without explicitly pre-committing. This is the firmest way that Yellen could have communicated that a March hike is likely."

When the Fed published its economic forecasts for the next three years in December it suggested that the Federal Funds rate may rise to 1.4% in 2017, 2.1% in 2018, and 2.9% in 2019.

BBC

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