Federal Reserve Likely to Raise Interest Rates

In a recent speech given in Cleveland, OH Federal Reserve chair Janet Yellen said she anticipates raising interest rates before the end of the year. She went on to say that the frequency of any increases would be gradual and would depend on the continued improvement of the U.S. economy.

“… I want to emphasize that the course of the economy and inflation remains highly uncertain, and unanticipated developments could delay or accelerate this first step. We will be watching carefully to see if there is continued improvement in labor market conditions, and we will need to be reasonably confident that inflation will move back to 2% in the next few years,” Yellen said.

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In summary, Chair Yellen stated there were some determining factors that may possibly hold back future growth. She noted that businesses are retaining large cash amounts on their company balance sheets — an indication of risk aversion — and the housing market seems on the way to gradual improvement. Some market experts predict the Federal Reserve will raise interest rates as early as the end of the summer.

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