Set to Lift Interest Rate, Fed Embraces Investors’ Optimism -
By BINYAMIN APPELBAUMMARCH 3, 2017
Janet L. Yellen, the chairwoman of the Federal Reserve, said
that the Fed plans to raise its benchmark interest rates this month if conditions are favorable.
Ms. Yellen added that the Fed still expected to raise rates twice more later in the year, which she said would bring the benchmark rate close to a level
that the Fed regards as neutral, with low rates no longer providing an inducement for borrowing and risk-taking.
Federal funds target rate
The broader consequences depend on the Fed’s ability to raise interest rates without slowing economic growth.
William C. Dudley, the president of the Federal Reserve Bank of New York, who described markets as “very buoyant” on Tuesday, has said in the past
that if markets did not respond to rate increases, the Fed might need to act more forcefully to tighten financial conditions.
“There is almost no economic indicator that has come in badly in the last three months.”
Asked whether Fed officials were delivering a coordinated message, Mr. Fischer
responded wryly, “If there has been a conscious effort, I’m about to join it.”
The impending rate increase could heighten tensions with the White House, which wants to stimulate
growth by cutting taxes, reducing regulation and increasing defense and infrastructure spending.
