The first three months of this year were lousy for the U.S. economy. The second three months have gotten better, but it’s still not a hugely impressive economic boom. However, it might just be enough to have the Federal Reserve raise interest rates next month. If that’s to be, America’s top central banker has the chance spell out her intentions in the week ahead.
Federal Reserve chairman Janet Yellen returns to Harvard on Friday for a conversation about the economy. In the early 1970s, Yellen was an assistant professor at the university. Friday’s event honors her with the school’s Radcliffe Medal, awarded to “an individual who has had a transformative impact on society.” That accomplishment is not just past tense for Yellen. It is present and the immediate future.
The conversation that follows the award on Friday ostensibly is about her career, which is a worthy topic. But any public conversation with a sitting Federal Reserve member must touch on interest rates. We know that in the private deliberations of Federal Reserve leaders during their last interest rate meeting in April, the possibility of hiking rates in June was discussed. Seriously discussed.
In December, the central bank raised rates for the first time seven years. Since then -- nothing. The stock market’s sell-off early this year and an underwhelming economy forced the Fed to be patient.
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As both the market and the economy have rebounded, Yellen has the occasion on Friday to clarify her group’s intent. She also runs the risk of confusing investors who have been led to believe in the Fed’s growing confidence the economy can withstand higher interest rates.
Financial journalist Tom Hudson hosts ‘The Sunshine Economy’ on WLRN-FM in Miami. Follow him on Twitter @HudsonsView.