The Federal Reserve should raise interest rates “in the coming months” if the economy picks up as expected and jobs continue to be generated, U.S. central bank chief Janet Yellen said on Friday, bolstering the case for a rate increase in June or July.
“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,” Ms. Yellen said during an appearance at Harvard University.
Her comments, while balanced, suggested the powerful Fed chair is on board with several of her colleagues who in recent weeks have said the central bank is preparing to follow up on an initial policy tightening in December.
Although Ms.Yellen expressed caution about too steep a rise in U.S. rates, she sounded more confident than she has in the past that the U.S. economy has rebounded from a weak winter and that inflation would edge higher toward the Fed’s 2 per cent target.
‘Growth picking up’ “The economy is continuing to improve ... growth looks to be picking up,” Ms. Yellen told a group of professors and alumni at the Ivy League college in Cambridge, Massachusetts. She expects the labour market to continue to improve despite much progress because “further gains are possible,” she said.
