News Bites

US rate rise likely this month

Monday 6th of March 2017

US Federal Reserve chairman Janet Yellen gave a hat tip to a March rate hike in her most recent speech.

She said that if the economy continues to evolve as expected this month “…a further adjustment of the federal funds rate would likely be appropriate.” During the Q&A she explicitly mentioned that the outlook does not incorporate a fiscal boost and that three rate hikes appear to still be appropriate this year.

Separately, Stanley Fischer said that he “strongly supports” the advice given by FOMC members over the past weeks and that there was a conscious effort to raise market expectations for a March hike.

If a significant fiscal spend gets factored into their forecasts the pace of rate hikes will likely intensify. Notably, Yellen underscored the importance of being forward looking by “focusing on the medium-term outlook – roughly two or three years out – when making policy decisions.”

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