US Federal Reserve Chair Janet Yellen on Friday signaled an interest rate increase could be on the way this month — if US employment and inflation remain in line with expectations.
Analysts said her words were a clear sign that the central bank would raise the benchmark lending rate at the March 14 and March 15 policy meeting.
The Fed last raised the federal funds rate in December last year — only the second increase in a decade — but Yellen’s comments confirm the expectation of another move following recent statements from other Fed officials.
The Fed’s policy-setting rate 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 a Chicago business group.
“They’ll hike this month unless payrolls are disastrous,” Pantheon Macroeconomics chief economist Ian Shepherdson said.
The Fed would get to see one more employment report before they decide the direction of interest rates, when the US Department of Labor releases data for last month on Friday. They are also scheduled to see two inflation reports the following week.
Barclays analysts also highlighted Yellen’s comments on the reduced economic risks in the global economy.
“In our view, this show of confidence in both domestic and external conditions suggests the committee is increasingly comfortable continuing to tighten policy further,” they said.
However, Yellen said central bankers continue to believe they would only need to raise rates “gradually,” assuming the economic data “continue to come in about as we expect.”
“Those increases would keep the economy from significantly overheating, thereby sustaining the expansion and maintaining price stability,” she said.
Fed officials in December last year projected three rate hikes this year, but in the wake of the 2008 financial crisis, the Fed’s moves have been “at a slower pace than most FOMC [Federal Open Market Committee] participants anticipated in 2014,” she said.
“The ongoing expansion has been the slowest since World War II, with real GDP growth averaging only about 2 percent per year” because of “slower growth in the labor force in recent years ... and disappointing productivity growth both in the United States and abroad,” Yellen said.
However, she once again warned that monetary policy cannot address all the ills in the economy, and it falls to US Congress and US President Donald Trump’s administration to take the appropriate steps.
“Fiscal and regulatory policies — which are of course the responsibility of the administration and the [US] Congress — are best suited to address such adverse structural trends,” she said, including the relatively worse economic circumstances for blacks and Hispanics and slow productivity.
Asked after her speech about how expected tax and spending policies might figure into the Fed’s outlook, Yellen said officials would wait until they know more about the composition and timing of any changes.
SCHEDULE: The delegation is due to meet with President Tsai Ing-wen this morning and witness the signing of an MOU on bilateral health cooperation in the afternoon US Secretary of Health and Human Services (HHS) Alex Azar yesterday arrived in Taipei aboard a US government plane at the head of a delegation that is the highest-level visit by a US official since Washington switched diplomatic recognition to China in 1979. Azar’s flight landed at Taipei International Airport (Songshan airport) at 4:48pm, nearly one hour earlier than scheduled, the Ministry of Foreign Affairs said. The apron where it landed is reserved for military aircraft, the Songshan Air Force Base Command said. The members of Azar’s delegation included HHS Assistant Secretary for Preparedness and Response Robert Kadlec, HHS Chief of Staff Brian
CHINESE FIGHTERS: Beijing marked the US Cabinet member’s visit by briefly sending two warplanes across the median line of the Taiwan Strait yesterday morning President Tsai Ing-wen (蔡英文) yesterday met with US Secretary of Health and Human Services Alex Azar in the highest-level official meeting between the two nations since 1979. “It is a true honor to be here to convey a message of strong support and friendship from [US] President [Donald] Trump to Taiwan,” Azar said during the open portion of his courtesy call to the Presidential Office, which was streamed live online before Tsai and Azar held a closed-door meeting. “Taiwan’s response to COVID-19 has been among the most successful in the world, and that is a tribute to the open, transparent,
ALEX AZAR: The first visit by a head of the Department of Health and Human Services would strictly observe the CECC’s special regulations, the Ministry of Foreign Affairs said US Secretary of Health and Human Services (HHS) Alex Azar is to lead a delegation to Taiwan — the highest-level visit by a US Cabinet official since the two sides cut formal relations in 1979. The plan was announced yesterday morning by the US Department of Health and Human Services and confirmed by the Ministry of Foreign Affairs (MOFA). Beijing has expressed its concerns to Washington, Chinese Ministry of Foreign Affairs spokesman Wang Wenbin (汪文斌) said later yesterday. Taiwan and the US only issued statements saying that the visit would happen “in the coming days.” MOFA said that due to security concerns, it would
‘CROSS-STRAIT CONSIDERATIONS’: Groups said that the Ministry of Education’s policies excluded Chinese and students should not be blocked over political issues The Taiwan International Student Movement yesterday said it would protest today outside the Ministry of Education in Taipei against a policy that excludes some Chinese students from returning to Taiwan amid the COVID-19 pandemic. Since June 17, the ministry has allowed foreign students from 19 “low risk” and “medium-low risk” countries and regions to enter Taiwan. On July 22, it announced that it was relaxing restrictions to include students from all countries and regions who are graduating this semester and on Wednesday it further expanded entry to students enrolled in degree programs. A letter sent by the ministry on Wednesday to universities did