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Yellen’s speech on interest rates reignites Twitter speculation

Rate hike still likely for 2015

Federal Reserve Chair Janet Yellen reignited speculation on Twitter when she reiterated her stance that the Federal Open Market Committee will likely raise the federal funds rate this year in her latest speech at the University of Massachusetts.

Here’s a small clip (click here for the full speech):

Consistent with the inflation framework I have outlined, the medians of the projections provided by FOMC participants at our recent meeting show inflation gradually moving back to 2%, accompanied by a temporary decline in unemployment slightly below the median estimate of the rate expected to prevail in the longer run. 

And as long as nothing changes, Yellen said:

This expectation, coupled with inherent lags in the response of real activity and inflation to changes in monetary policy, are the key reasons that most of my colleagues and I anticipate that it will likely be appropriate to raise the target range for the federal funds rate sometime later this year and to continue boosting short-term rates at a gradual pace thereafter as the labor market improves further and inflation moves back to our 2% objective.

Here are a few tweets on the industry’s reaction on Twitter.  

This isn’t the first time that Yellen has said that the FOMC will raise rates this year, making similar comments back in July.

However, most people were under the impression that that the Fed would raise rates in the September meeting. They were wrong.

Instead, the Fed announced in September that it would once again delay liftoff from its zero interest rate policy.

There are now only two FOMC meeting left this year: Oct. 27-28 and Dec. 15-16.

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