Yellen signals the Fed will likely raise rates this month

Posted March 04, 2017

A litany of Federal Reserve speakers including Chair Janet Yellen are today expected to pave the way for a rate hike at the Fed's upcoming meeting.

Gold prices were on track for their weakest session since December on Thursday, buoyed by a firm dollar and rising United States rate hike expectations in March following buoyant United States economic data and hawkish comments from Federal Reserve governors.

Futures traders are now pricing in a 66 percent chance of a Fed hike in March, up from 35 percent on Wednesday, according to the CME Group's FedWatch Tool.

An improving global economy and a solid US recovery mean it will be "appropriate soon" for the Federal Reserve to raise USA interest rates Fed Governor Lael Brainard said on Wednesday, adding an important voice to the chorus of officials signalling rates may rise as soon as mid-March.

Recent moves by China have helped, she said, while the European Central Bank's patient and persistent bond buying, among other policy moves, appears to be paying off.

'Two months into 2017 and despite a slowing in the rate of growth in February, manufacturers continue to register strong levels of output, healthy order books and growing trade courtesy of a weak sterling, ' noted Mike Rigby, head of manufacturing at Barclays.

That's because on Tuesday, William Dudley, president of the Fed's NY regional bank and a close Yellen ally, said the case for raising rates had "become a lot more compelling".

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Brainard's words came after New York Fed President William Dudley and San Francisco Fed President John Williams both expressed support for a rate-hike in the near future on Tuesday.

USA consumer spending cooled in January as demand for automobiles and utilities fell, but inflation recorded its biggest monthly increase in four years. But the most recent data - notably on job growth, manufacturing and consumer confidence - along with surging stock prices have been broadly encouraging.

The ostensible reason was that banks find it easier to make profits in times of higher interest rates - and so bank share prices led the way as the U.S. market hit new record highs and others followed.

The Fed raised its key interest rate in December for the first time in a year, and projects three more rate hikes in 2017.

The Fed policymakers' words continued to boost the greenback on Thursday. That's just below the Fed's official target of 2%. On the Nasdaq, 1,402 issues rose and 840 fell.

Hyman also said that Friday next week's employment report, five days before the Fed announcement, would be important, adding that he expects average hourly earnings to climb 0.4 percent in last month's report, up from 0.1 percent in January, adding to the case for a rate hike.