Fed chair Yellen wants to take the measured- stable approach

According to the latest labor market data, U.S. labor market had the biggest gain in 20 years, as economist and market analysts are waiting for the Federal Reserve to increase the interest rate.

In an announcement on Friday, the Fed chair Janet Yellen said, the Federal Reserve wants to take slow and steady steps towards increasing the interest rate. The economists are now suggesting that the eagerly waiting interest rate hike will not come before the end of the year.

The indication of timing regarding interest rates comes after several months of looking for hints into Federal Reserve`s meetings and speeches for hints by the investors. Whenever the Feds decides to increase the rate, it will be first interest rate hike in six years. According to the economists, this is one of the biggest tolls to stimulate the U.S. economy as in recent time’s economic data is suggesting a slow growth. It was also mentioned that, the Feds interest rate is also regarded as benchmark for other interest rates. Some economists had previously suggested that the interest rate hike could come as soon as June, but after Sunday`s announcement the economists are saying that it will not be no sooner than September. Yellen said, “The appropriate time has not yet arrived. Conditions may warrant an increase in the federal funds rate target sometime this year.”

After a positive data from the labor market, Yellen also suggested that, the labor market data would be an important factor for the Feds to decide the interest rate hike. The ADP National Employment Report is due on Wednesday. This report usually focuses on the private sectors and the economists are waiting for the non-farm payroll numbers. According to the economists, they are predicting a 244,000 rise in the non-farm payroll in March.

In her announcement Yellen had also suggested that the core inflation is not the preconditions for the Feds to increase the rates, as a recent data suggested a low inflation. But it was also reported that with the increase of fuel price, consumer prices also rebounded in February. Yet the economists also want to put focus on the average earnings. According to the recent data the average earnings had risen to 3 cent per hour in February.