The Right Time For A Fed Rate Hike Could Be Soon

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November 17, 2016

This week, Fed Chair Janet Yellen spoke in favor of policy tightening in December.

According to CNBC, Yellen said that a federal funds rate increase could be "appropriate relatively soon.” The longer the Fed waits to raise the rate, the quicker it will have to tighten policy in the future. And, keeping the rate at the current level could encourage excessive risk-taking, leading to instability.

Yellen also repeated her pledge that subsequent moves will come at a gradual pace. … Yellen said "the risk of falling behind the curve in the near future appears limited, and gradual increases in the federal funds rate will likely be sufficient to get to a neutral policy stance over the next few years."

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