With U.S. Economy Improving, Yellen Pushes for Interest Rate Increase

Federal Reserve Chair, Janet Yellen, continues to push for an interest-rate increase this year because of the improvement in the U.S. economy. Yellen stated, “I expect that it will be appropriate at some point this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy.” This would be the first rate increase in almost a decade. In June, federal policy makers forecast that there will be 2 quarter-point rate increases this year. However, the federal government said that it will not raise rates until it is confident that inflation will move back toward 2% over the medium term and sees more improvement in the labor market.

Moreover, Yellen is still concerned about the unemployment rate, which was 5.3% in June. She believes that this may be due to the fact that “a significant number of individuals still are not seeking work because they perceive a lack of good job opportunities.” Yellen also notes that the strengthened dollar’s impact on exports and the declined business investment (linked to lower oil prices) are two factors hindering the U.S. economy. She believes that the economy will grow as the value of the dollar and crude oil prices stabilize. 

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Caroline Smith is currently a senior at the University of Notre Dame and is a contributor to Medical Groups. She is majoring in Science-Business and Spanish. After graduation, Caroline plans on entering the field of healthcare consulting. She is most interested in the evolving policy changes in the healthcare industry and enjoys learning about new technologies that are being developed.