Yellen: Fed should proceed with caution on future interest rate hikes
Developments abroad now a variable
All eyes were on Federal Reserve Chair Janet Yellen this morning during her speech to the Economic Club of New York to see if she would give any insight on when the Fed would raise interest rates. Per Reuters:
From the article by Jonathan Spicer and Jennifer Ablan:
Federal Reserve Chair Janet Yellen said on Tuesday the U.S. central bank should proceed "cautiously" as it looks to raise interest rates again, because inflation has not yet proven durable against the backdrop of looming global risks to the U.S economy.
In her first comments since the Fed decided to hold rates steady two weeks ago, Yellen again sounded cautious tones about threats to the recovery of the world's biggest economy, appearing to push back on more hawkish recent comments from a handful of her colleagues.
"Developments abroad imply that meeting our objectives for employment and inflation will likely require a somewhat lower path for the federal funds rate than was anticipated in December," when the Fed raised rates for the first time in a decade, Yellen said at the Economic Club of New York.
While this is the first time Yellen went on the record, an article in Bloomberg by Jana Randow and Steve Matthews stated that two Federal Reserve officials recently said interest-rate increases may be warranted as soon as the central bank’s meeting next month.
The last Federal Open Market Committee meeting, which sets the benchmark interest rate for bank lending, announced that it would not be raising that rate in the short term.
According to Fannie Mae’s March 2016 Economic and Housing Outlook, economists at the government-sponsored enterprise expect the FOMC to raise rates in June and December, despite “flat” economic growth in 2016.