Research - FEBRUARY 25, 2015

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Interest rate hike may come later this year

by Loretta Clodfelter

The Federal Reserve may increase interest rates later this year. In testimony to Congress this week, Chair Janet Yellen said the Fed will “at some point begin considering an increase in the target range for the federal funds rate.”

Emphasizing patience, Yellen indicated that this move would not happen in the next couple meetings, but that means an interest rate hike could happen as soon as June.

The U.S. economy has been strengthening. The unemployment rate has dropped to 5.7 percent, as of January, according to the Bureau of Labor Statistics. However, inflation has stayed low — assisted by the fall in gas prices — and the Fed is unlikely to raise interest rates before inflation hits its 2 percent target.


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