Yellen Expects Fed to Raise Rates This Year

Janet L. Yellen, the Federal Reserve chairwoman, said that she expects the Fed to raise its benchmark interest rate this year as the domestic economy continued to gain strength.

“Based on my outlook, I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy,” she said in a speech to the City Club of Cleveland.

Ms. Yellen’s remarks, while similar to earlier comments, are the latest indication that Fed officials think the economy has shaken off a slow start to the year, and that they see little evidence that problems in China and Europe are significantly impeding domestic growth.

The Fed’s optimism remains measured, however. Ms. Yellen, noting that six years have passed since the recession ended, said the nation’s recovery remained incomplete.

“I think a significant number of individuals still are not seeking work because they perceive a lack of good job opportunities, and that a stronger economy would draw some of them back into the labor force,” she said.

Even as she affirmed the Fed’s plans to raise rates this year, she also emphasized that the Fed planned to retreat slowly from its stimulus campaign by raising interest rates more gradually than in the past.

(via NYT)