The Fed is moving toward raising interest rates, according to Federal Reserve Chair Janet Yellen.
In a speech given Friday to a conference of central bankers in Jackson Hole, Wyoming, Yellen touted a solid job market and an improved outlook for the U.S. economy, but stopped short of outlining a timetable for a possible rate hike. In her speech, Yellen discussed strong gains in employment and consumer spending, and said that while inflation is below the Fed’s 2% target, it’s being depressed primarily by temporary factors.
“In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months,” Yellen said.
Yellen did not specify when rates might increase.
“Our decisions always depend on the degree to which incoming data continues to confirm the [Fed’s] outlook,” she said.
If the Fed declines to raise rates in September, it has two more meetings in 2016 – one in November preceding the election and on in December – at which an increase could be implemented.
After Yellen’s comments, traders put the probability of a rate increase in September at 24% and in December at 57%.