Fed Move To Hike Key Interest Rate Would Show Confidence In Economy
The Wall Street Journal reported that Federal Reserve Chairman Janet Yellen indicated Friday that the Fed’s Open Market Committee is likely to raise the benchmark Federal funds rate at a policy making meeting sometime in the next few months, provided economic data continue to show the US economy is improving. During a panel discussion at Harvard University, Yellen said, “It’s appropriate…for the Fed to gradually and cautiously increase our overnight interest rate over time, and probably in the coming months such a move would be appropriate.” The comments indicate that a rate increase is likely at the FOMC’s meetings in June, July, or September.
The New York Times quoted Yellen as saying, “Growth looks to be picking up from the various data that we monitor, and if that continues and if the labor market continues to improve — and I expect those things will occur” – raising rates would be appropriate. The Times said Yellen’s remarks at Harvard came as “fresh evidence” suggests the economy is strengthening “as resilient consumer spending and a buoyant housing market help to overcome a drop in investment by cautious companies.”
What This Means For Small Business
Inaction by the FOMC is hurting businesses of all sizes. As NFIB Chief Economist Bill Dunkelberg recently told CNBC, “The major impact of Fed policy, or lack thereof, is basically producing immense uncertainty and no confidence. So people won’t put their money on the table, they won’t expand, they won’t hire.”
Additional Reading
The AP and Bloomberg News provided similar coverage of Yellen’s remarks.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.
