Federal Reserve Chair Janet Yellen says the Fed is moving toward raising interest rates in light of a solid job market and an improved outlook for the U.S. economy and inflation. But she's stopping short of signaling any timetable for the next rate hike.
Yellen offered a generally upbeat assessment of the economy Friday in a speech to a conference of central bankers in Jackson Hole, Wyoming. She pointed to strong gains in employment and strength in consumer spending. Yellen also noted that while inflation is still running below the Fed's 2 percent target, it is being depressed mainly by temporary factors.
In light of the economy's gains, the Fed chair said the case for an increase in the central bank's key policy rate "has strengthened in recent months."
Some economists have said they think conditions are ripe for the Fed to alert investors that it may be inclined to act at its next policy meeting, Sept. 20-21.
Two close Yellen allies — William Dudley, president of the Federal Reserve Bank of New York, and Stanley Fischer, the Fed's vice chairman — suggested in the past week that a strengthening economy would soon warrant a resumption of the rate hikes the Fed began in December. That was when it raised its benchmark lending rate from near zero, where it had been since the depths of the financial crisis in 2008.
David Jones, chief economist at DMJ Advisors, said this week that he thought the chances of a September rate hike are rising, especially if forthcoming economic data, including next week's jobs report for August, show strength.
But other economists have said they think December remains a more likely time for a resumption of rate increases. And some have said that if the Fed does decide to act in September, it would need to further prepare investors. According to data from the CME Group this week, investors foresee only about a 21 percent probability of a rate hike in September and only about a 52 percent chance by December.
Yellen is the lead-off speaker Friday for an annual conference attended by members of the Fed's board of governors in Washington, officials from the Fed's 12 regional banks and monetary leaders from around the world.
The conference's theme is "Designing Resilient Monetary Policy Frameworks for the Future," reflecting concern that the global economy has become trapped in a slump of low growth and low inflation and uncertainty about how central banks should respond.
In advance of Yellen's speech Friday, George, Fischer and eight other Fed officials met Thursday with about 120 activists from the Campaign for Popular Democracy's Fed Up coalition. The group of policy activists, labor unions and community groups has been lobbying the Fed to keep rates low to allow the economy to strengthen enough to benefit more Americans.
The group, wearing T-shirts bearing the slogan, "We Need a People's Fed," posed questions about economic policy and the need for diversity to the Fed officials who took part in the hour-long discussion.
The coalition also wants the Fed and Congress to consider changes in the makeup of the boards of directors of the 12 regional banks to promote more diversity among a group of officials that is mainly white and male and dominated by bankers.
