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Yellen: Rates May Rise Sooner Than Expected
Federal Reserve Chairwoman Janet Yellen said that the Fed may need to raise interest rates sooner than expected, but it all will hinge on the labor market.
“If the labor market continues to improve more quickly than anticipated by the Federal Open Market Committee, resulting in faster convergence toward our dual objectives, then increases in the federal funds rate target likely would occur sooner and be more rapid than currently envisioned,” Yellen testified to the Senate Banking Committee on Tuesday. On the other hand, “if economic performance is disappointing, then the future path of interest rates likely would be more accommodative than currently anticipated.”
Interest Rates and Housing
Currently, the majority of Fed officials expect the central bank to begin raising interest rates about a year from now. The Fed’s benchmark short-term rate has stayed near zero since December 2008, which has helped to keep interest rates near historical lows.