Federal Reserve chair Janet Yellen on Friday confirmed she expects interest rates will be raised at some point in 2015, without definitively saying when such a move would occur.
During a speech Yellen made in Cleveland, Ohio, the Fed chair said she expected “it will be appropriate at some point later this year to take the first step to raise the federal fund rates and thus begin normalizing monetary policy.”
Throughout much of the speech, Yellen stuck to a familiar script. She talked about the decline of the national unemployment rate, but how the nation still remains far away from true “full employment.” She pointed to concerns about the labor force participation rate, which has been declining even in a stronger job market, as well as worries about part-time workers that would rather work full time. Those concerns have all been listed in many prior statements.
And while Yellen strongly hinted a rate increase will occur at some point in the back half of 2015, she tossed in a few caveats, saying the course of the economy remains uncertain and “unanticipated developments” could delay or accelerate that first step. She also stressed that a move on federal rates would only have a “very small effect” as any action on rates will be gradual. An increase would be the first interest rate hike in nine years.
Yellen’s speech comes just two days after the minutes of a Federal Reserve gathering held in the middle of June were released. That statement indicated that officials were worried about some soft spots in the U.S. economy, as well as a slowdown in growth in China and other emerging markets and potential pitfalls in Greece.