Fed’s Fischer suggests rate hikes on track for this year

Speaking at the annual three-day symposium in the U.S. state of Wyoming, Yellen showed she was cautiously upbeat about the USA economy. She also described consumer spending as “solid”, but noted that business investment was weak and exports were taking a hit from a strong US dollar. Citing continued expansion in US economic activity, especially housing spending, plus an inflation rate running below the FOMC’s desired two percent level, Yellen wondered aloud if this was the right time for another rate increase.

The Fed has three more policy meetings scheduled this year – in September, November and December.

Still, Yellen has left a room open for prolonging her inaction on the rate front by saying that future data releases will set the direction.

Pointing to solid growth in household spending and a strengthening job market, Yellen said that the USA economy is “now nearing” the Fed’s statutory goals of maximum employment and price stability. Another possibility is after the Fed meeting in December. It had been kept near zero since the recession.

Aug 26 Wall Street reversed course to trade lower on Friday afternoon after hawkish comments from Federal Reserve Vice Chair Stanley Fischer raised the specter of a rate hike as soon as next month.

The job market is humming, and so are the US financial markets, with major stock indexes near record highs. What they didn’t have much to say about was when it might happen.

Fischer added that the August jobs report out next Friday will factor into the Fed’s decision. “We think the evidence is that the economy has strengthened”.

Earlier, Atlanta Fed President Dennis Lockhart said on Bloomberg Television that the Fed could hike rates possibly twice this year. But he said that would depend on the strength of forthcoming economic data.

“She’s certainly tried to make a case, but the market doesn’t believe that the Fed is going to actually raise rates”, said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management.

The Fed chair on Friday defended the extraordinary tools the central bank has used to support the economy since the 2007-2009 Great Recession.

“Our expectation is September is probably still off the table but most likely the next increase in December”, Drilling said.

But to combat future downturns, she said the Fed should explore other options, too. She added that the FOMC expected the inflation to rise to 2% over the next few years.