The US Federal Reserve will increase rates

31st August 2016

Hugues Chevalier, Economist

Last week, at the traditional annual meeting of the central bankers in Jackson Hole, in Wyoming, Janet Yellen, the chair of the Federal Reserve (Fed) announced the upcoming increase of the US interest rates, without providing any clear timeline.

Indeed, and despite a week growth, the strength of the employment market pushes the monetary authorities to tighten their monetary policy. “Indeed, in light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months” declared Jante Yellen, opening so for the possibility of an increase as soon as the next Fed meeting of September 21th.

The last rate hike was in December 2015. Since then the Fed has not wanted to tighten its monetary policy for fear of breaking the growth considered as week and which was of only 1.1% in the 2nd quarter. The agenda of the rate hikes remains so unknown.