It's beginning to look a lot like a March rate hike, unless there's a big shock in the next two weeks.
Federal Reserve Board Chair Janet Yellen said Friday if inflation and employment statistics stay strong, the Federal Open Market Committee could raise rates in March.
"Indeed, at our meeting later this month, the Committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate," Yellen said in a Chicago speech, according to prepared text released by the Fed.
This follows other Fed officials saying the March meeting is live or a rate hike could be appropriate "soon."
"[G]iven how close we are to meeting our statutory goals, and in the absence of new developments that might materially worsen the economic outlook, the process of scaling back accommodation likely will not be as slow as it was in 2015 and 2016," Yellen added.
It is difficult to precisely determine the neutral real federal funds rate, she said, noting that in December, FOMC participants generally saw its longer-run value near 1%. Although it's currently below 1%, Yellen said, FOMC members "generally anticipate that the neutral real federal funds rate will rise to its longer-run level over the next few years. This expectation partly underlies our view that gradual increases in the federal funds rate will likely be appropriate in the months and years ahead: Those increases would keep the economy from significantly overheating, thereby sustaining the expansion and maintaining price stability."
She repeated, there's "no evidence that the Federal Reserve has fallen behind the curve, and I therefore continue to have confidence in our judgment that a gradual removal of accommodation is likely to be appropriate. However, as I have noted, unless unanticipated developments adversely affect the economic outlook, the process of scaling back accommodation likely will not be as slow as it was during the past couple of years."
