While she isn't able to predict when rates will be raised again or how high they will go, Federal Reserve Board Chair Janet L. Yellen, suggested a "few" increases each year until the fed funds rate target nears 3% by the end of 2019.
"Now, many of you would love to know exactly when the next rate increase is coming and how high rates will rise. The simple truth is, I can't tell you because it will depend on how the economy actually evolves over coming months," Yellen told The Commonwealth Club in San Francisco on Wednesday, according to prepared text released by the Fed. "The economy is vast and vastly complex, and its path can take surprising twists and turns. What I can tell you is what we expect--along with a very large caveat that our interest rate expectations will change as our outlook for the economy changes. That said, as of last month, I and most of my colleagues--the other members of the Fed Board in Washington and the presidents of the 12 regional Federal Reserve Banks--were expecting to increase our federal funds rate target a few times a year until, by the end of 2019, it is close to our estimate of its longer-run neutral rate of 3 percent."
While noting monetary policy and economics are "inexact sciences," she contrasted setting policy to setting a thermostat: "You can't just set the temperature at 68 degrees and walk away. And, because changes in monetary policy affect the economy with long lags sometimes, we must base our decisions on our best forecasts of an uncertain future. Thus, we must continually reassess and adjust our policies based on what we learn."
Yellen said the U.S. economy is "close" to the Fed's dual mandate of price stability and full employment.