Janet Yellen’s premium on consensus may lead to a Federal Reserve decision the chair hasn’t yet endorsed, as a near majority aligns in favor of a possible June interest rate hike.
Seven of the Fed’s current 17 members have now said they at least want the option of a June tightening on the table, or have pushed in general for an earlier increase amid an expectation that wages and inflation will turn higher.
By contrast, there’s a dwindling core of officials who say publicly that the economy and labor markets in particular still have a long way to go — only four Fed members have in recent weeks clearly said that rate hikes won’t be appropriate until much later in the year or even into 2016.
The five members of the Fed’s Washington-based board of governors, including Yellen, have spoken less definitively, though governors including Jerome Powell have said they expected strong job growth to continue. Not all of the seven who point to June vote this year on the Fed’s ten-member policy setting committee, but all participate in policy discussions.
The Fed is likely at its March 17th and 18th policy meeting to remove language saying the central bank will take a “patient” approach to raising rates, taking away the final verbal constraint to a June rate hike, current and former Fed officials say.
“It’s likely they remove ‘patient’ in March,” said David Stockton, a former Fed research director now at the Peterson Institute for International Economics. “Even if Yellen might not, left to her own devices, be ready to move on rates, there is probably a growing sentiment that the time is getting closer.”