Fed likely to increase interest rates at March meeting

Federal Reserve chair Janet Yellen says economic activity has picked up in testimony before the U.S. Senate Banking Committee Tuesday, indicating the next rate hike could come as early as the next Fed meeting, March 14-15.

“Waiting too long to remove accommodation would be unwise,” Yellen told the Senate.

Yellen called the U.S. job market strong and said prices are moving up at a faster pace. “At our upcoming meetings, the committee will evaluate whether employment and inflation are continuing to evolve in line with these expectations, in which case a further adjustment of the federal funds rate would likely be appropriate,” Yellen said.

According to an article in CNN Money: The U.S. 10-year bond yield rose immediately after Yellen’s statement from 2.44 percent to 2.5 percent and may cause a mortgage rate increase. The Fed predicts three rate hikes in 2017, though in early 2016 four were anticipated, and only one increase was enacted.

The article went on to say, “We still think the Fed is unlikely to resume tightening before June,” wrote Capital Economics, a forecasting firm. Read more at CNN Money.