Janet Yellen is getting closer to raising interest rates.
The Chair of the Federal Reserve signaled that a rate hike this year is still on the table.
“I believe the case for an increase in the federal funds rate has strengthened in recent months,” Yellen said in a speech in Jackson, Wyoming.
But Yellen was vague on timing. The Fed’s committee next meets in late September. It also has a meeting in early November, however, it’s unlikely the Fed would raise rates right before the U.S. elections.
Plus, such ambiguity from Yellen may indicate that the Fed will wait until its meeting in December to raise rates.After all, Yellen said in May that a rate increase would be appropriate over the summer months. She then changed course when the May jobs report was shockingly weak. Now she’s giving no time reference.
But the job market bounced back in June and July, adding over a half million jobs in that period. Yellen highlighted the job market’s improvement and “solid growth” in consumer spending.
The Fed watch continues, with many economists and business leaders opining on when the next interest rate increase is likely to occur. The decision can affect financial institutions in multiple ways, including the need to train tellers and other banking personnel about product positioning and pricing in a rising rate economy. With low interest rates being around for the better part of a decade, many banking associates have little-to-no experience working in a rising rate economy.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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