Yellen says rate hike probably appropriate in coming months

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Federal Reserve Chair Janet Yellen said Friday an interest rate hike is “probably” appropriate in the coming months if economic data improve. 

“I think for the Fed to gradually and cautiously increase our overnight interest over time and probably in the coming months, such a move would be appropriate,” she said at Harvard University.

Her appearance comes as colleagues on the Fed’s policymaking committee have pointed to an increase in the federal funds rate target sooner rather than later. Yellen has expressed caution this year on rates, as inflation lags below the Fed’s 2 percent target and possible global risks persist.

The Fed’s policymaking committee next meets on June 14 and 15. Markets have priced in a roughly 28 percent chance of a hike in June and 57 percent in July, according to the CME Group. 

Those odds spiked after the minutes from the Federal Open Market Committee’s April meeting showed most policymakers would support a hike in June if economic data improved as expected. Market expectations have sagged slightly this week, however.

On Thursday, FOMC voters continued to hint a hike may come in the near future. Fed Governor Jerome Powell said an interest rate hike could be appropriate “fairly soon,” adding that he supports gradual increases if data underpin forecasts for an improving economy.

Earlier Thursday, St. Louis Fed President James Bullard told reporters he believes markets “read the minutes correctly.”

Yellen says rate hike probably appropriate in coming months