Although consumers continue to enjoy record low interest rates, Janet Yellen warned during her speech at the San Francisco Federal Reserve on Friday that higher rates may be necessary at some point in the not-too-distant future.
“Like most of my [Fed] colleagues, I believe that the appropriate time has not yet arrived, but I expect that conditions may warrant an increase in the federal funds rate target sometime this year,” she said. “If conditions do evolve in the manner that most of my [Fed] colleagues and I anticipate, I would expect the level of the federal funds rate to be normalized only gradually, reflecting the gradual diminution of headwinds from the financial crisis and the balance of risks I have enumerated of moving either too slowly or too quickly.”
Image via flickr/Chris Butterworth