Janet Yellen Expects To Raise Interest Rates By End Of Year

Economists across the country spent the better part of the year debating when the Federal Reserve will raise interest rates.  Some economists are very hawkish with their predictions, anticipating a rate hike ahead of summer.  Others are more dovish, and predict there will be no changes until the end of the year, potentially back to 2016.

Federal Reserve Chairwoman Janet Yellen was in Providence, Rhode Island on Friday as a guest at the state capital’s Chamber of Commerce.  When asked about the federal perspective on interest rates, Yellen said that she and the Federal Open Market Committee expect that rates will rise before the end of the year.

“I think it will be appropriate at some point this year to take the initial step to raise the federal-funds rate target and begin the process of normalizing monetary policy.”

The next FOMC meeting is scheduled for June 16-17, less than a month away from Yellen’s comments this week.  Ongoing concerns about employment were cited as the primary reason for a slow and cautious approach towards interest rates.

Despite the nominal unemployment rate promoted at 5.4 percent, the lowest rate in several years, many Americans have disappeared from the labor market due to a lack of options for so many years.  There are also millions of people working part time jobs, forced to get by on minimal pay, yet are willing and able to work full time.

Yellen says it has taken six years for the full economic recovery to begin, and is hesitant to raise the costs for mortgages, credit cards, or other financial obligations of households that still struggle to make ends meet.

“The labor market is approaching full strength.  I say approaching because in my judgment we are not there yet.”

Yellen also said that external factors like the weak Euro zone and now a slowdown in economic output from China warrants a steady as she goes approach to domestic borrowing costs.

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