Last Thursday Nov. 17, Federal Reserve Chair Janet Yellen testified at a joint Congressional meeting. She began her comments by saying "the case for an increase in the target range had continued to strengthen." This is the first time she has spoke to the public since the election. She noted that the job market maintained momentum this year and wage growth is starting to pick up. Yellen believes inflation is slowly moving in the right direction and low wages in the main reason why many Americans continue to feel left out of the economic recovery. In December of last year, the Fed targeted a higher interest rate for the first time in almost a decade.
Some economists are saying that Trump's large government spending plans could force the Fed to raise interest rates.The Fed has been under criticism by not only Wall Street investors, but also president elected Donald Trump for not increasing the rate already. At the beginning of 2016, Federal officials estimated they would raise interest rates four times. According to CME Group, investors say there is an 85% chance the rate will increase again in December.
http://money.cnn.com/2016/11/17/news/economy/janet-yellen-fed-rate-testimony-congress/
Based on Trump's expected future economic endeavors for the U.S. it is understandable the Fed is predicting to raise the interest rate in accordance with the government's spending.
ReplyDeleteMr. Trump’s election has not altered the Fed’s short-term plans. Ms. Yellen made clear in her testimony that the central bank remained likely to raise its benchmark interest rate at its next meeting, in mid-December. “The evidence we’ve seen since we met in November is consistent with our expectation of strengthening growth and an improving labor market,” Ms. Yellen said. “I do think the economy is making very good progress toward our goals.”
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