Following another round of worthless non-revelations before the US Senate Banking committee, the Wall Street Journal reports Yellen Says Fed Will Consider Raising Rates at Coming Meetings.

Federal Reserve Chairwoman Janet Yellen signaled the central bank could consider raising short-term interest rates at its next policy meeting in March and sounded an optimistic note on the economy in testimony to Congress on Tuesday.

If job gains and rising inflation continue as the Fed expects, an increase in the benchmark federal-funds rate likely would be appropriate “at our upcoming meetings,” Ms. Yellen said at the presentation of her semiannual monetary policy report to the Senate Banking Committee.

Ms. Yellen’s reference to “upcoming meetings” leaves the door open for a potential rate increase at the Fed’s March 14-15 policy meeting. Central-bank officials last lifted the fed-funds rate in December to a range between 0.50% and 0.75%, and penciled in three quarter-point moves in 2017. They held the rate steady at their Jan. 31-Feb. 1 meeting. A March move isn’t widely expected. Most economists surveyed recently by The Wall Street Journal expected the next rate increase in June.

Trump Uncertainty

The Financial Times paints an equally useless picture: Yellen Warns of Economic Uncertainty Under Trump.

The US economy and fiscal policy face an uncertain path under the Donald Trump administration, Janet Yellen warned on Tuesday as she declared “monetary policy is not on a preset course” but that it would be “unwise” to raise rates too slowly.

“As I noted on previous occasions, waiting too long to remove accommodation would be unwise,” she said.

Responding to questions later she declined to say whether the next rate increase would come at the Fed’s policy meetings in March or June. “I can’t tell you which meeting it would be. I can tell you that each meeting is live,” she said, adding: “It’s our expectation that rate increases this year will be appropriate.” 

Yellen also struck a note of caution about the new administration and expectations that its plans for tax cuts and infrastructure spending would lead to looser fiscal policy and more rapid growth.

“Considerable uncertainty attends the economic outlook,” she said, pointing to “possible changes in US fiscal and other policies” as one of the main sources of that.

Would there have been no uncertainty under Hillary? Is there ever no uncertainty?

Market Expectations

If the market does not expect a hike in March, the Fed will not hike. According to CME Fedwatch, Fed Fund futures imply only a 17.7% chance of a hike in March.

The next FOMC meeting date is March 15. It’s unlikely the data will be strong enough for rate hike odds to change significantly by that date.

In June, the futures imply a 70.7% chance of at least one hike.

Unless those odds change, the Fed will hike in June.

But in contrast to March where there is too little time in which data can be strong enough to hike, there is plenty of time between now and June for economic data to weaken enough where the Fed will not hike.

The meeting revealed nothing.

Mike “Mish” Shedlock