Janet Yellen, the Federal Reserve chairwoman, said Wednesday that economic conditions are ripe for the Fed to start raising its benchmark interest rate this month, a move that appears all but inevitable.
“The economy has come a long way toward the … objectives of maximum employment and price stability,” Yellen said, according to the prepared text of a speech to the Economic Club of Washington.
Yellen said that when the Fed decides to raise rates, the decision would be “a testament, also, to how far our economy has come in recovering from the effects of the financial crisis and the Great Recession.”
“It is a day that I expect we all are looking forward to,” she said.
Yellen underscored that the Fed expects to raise rates slowly, because the economy remains weak. And she said the Fed’s policymaking committee will not make a final decision until its meeting Dec. 15 and 16.
Fed officials first will have the chance Friday to see the government’s estimate of November job growth.
Still, it appears that Yellen and her colleagues, who have held the Fed’s benchmark rate near zero for almost seven years, have finally concluded that the domestic economy is strong enough to keep growing with less support from the central bank.
Investors and analysts have generally concluded that the Fed is likely to raise its benchmark rate to a range of 0.25 to 0.5 percent. By keeping rates low, the Fed has sought to stimulate economic growth by encouraging risk-taking by investors, and borrowing by businesses and consumers. As it raises rates, the Fed will reduce those incentives.