(Bloomberg) -- Chair Janet Yellen said she expects the Federal Reserve to raise interest rates this year, and that subsequent increases will be gradual without following a predictable path.
“I expect that conditions may warrant an increase in the federal funds rate target sometime this year,” Yellen said Friday at a conference hosted by the San Francisco Fed. She and fellow policy makers “generally anticipate that a rather gradual rise in the federal funds rate will be appropriate over the next few years.”
After the initial increase, officials won’t follow “any predetermined course of tightening” that involves similar-sized increases at regular intervals, Yellen said.
“The actual path of policy will evolve as economic conditions evolve, and policy tightening could speed up, slow down, pause, or even reverse course depending on actual and expected developments in real activity and inflation,” she said.
Policy makers last week opened the door to an interest-rate increase as soon as June, while also signaling they’ll go slow once they get started. The benchmark federal funds rate has been kept near zero since December 2008.
“They are focused on keeping markets calm as they start the process,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York. “They can adjust as needed later.”
Janet Yellen remains calm and predictable, in contrast to the crowd which has been second guessing her strategy. She has my confidence. More importantly, remember the old adage: “Don’t fight the Fed.”
This item continues in the Subscribers’ Area.This section continues in the Subscriber's Area. Back to top