Fed Indicates Possible Rate Raise
March 20, 2014
Yellen Indicates that Fed May Raise Rates As Soon As Six Months After Tapering Runs Its Course
On the Hill
Representatives in the House continue to battle over the fate of the unemployment benefits extension bill. Yesterday, Speaker Boehner criticized the bill for its bureaucratic requirements and failure to add jobs and meet his fiscal responsibility threshold. While House members continue to debate the merits and provisions of the bill, the Senate is expected to vote on the proposed legislation next week.
- In an interview on Wednesday, President Obama confirmed that the U.S. would not pursue a military strategy with Russia over the conflict in Ukraine. Instead, the President emphasized the need for an international diplomatic coalition and economic aid to address the crisis in Ukraine.
Initial jobless claims, which show the number of individuals filing for unemployment insurance for the first time, increased by 5,000 this week to a lower-than-expected total of 320,000 claims. The four week moving average is 327,000 claims.
In a Federal Open Market Committee statement released yesterday, the Federal Reserve indicated that economic activity has slowed over the last few months, in part because of the winter weather conditions. Beginning in April, the Fed plans to slow the rate of its asset purchases by another $10 billion per month. The bank will continue to use the policy tools at its disposal as it works toward its dual objectives of maximum employment and price stability, with inflation at 2%.
- In her first FOMC post-meeting news conference, Federal Reserve Chairwoman Janet Yellen indicated that the Fed may raise interest rates as soon as six months after the bond-buying program ends. The announcement impacted both domestic and overseas markets as investors expressed concern over the prospect of an earlier-than-expected increase in rates.