Yellen Signals Rate Hike But Gives No Indication On Timing

Janet Yellen spoke today at the annual Jackson Hole symposium and once again indicated the Fed would be looking to raise rates, perhaps before the end of the year. Citing the improved labor market and the outlook for inflation and economic activity, she said, "I believe the case for an increase in the federal funds rate has strengthened in recent months".  That rather optimistic view was offset at almost the same time by the latest release of revised first and second quarter GDP from the BLS. The numbers hardly show an economy that is overheating. Second quarter GDP was revised down to just 1.1% and the first quarter GDP came in at an anemic 0.8%. Yes, the latest inflation numbers are getting close to the Fed's 2% target although even that is not a sure thing. But that 2% number is a target, not a cap, and there are many good arguments that higher inflation would actually be a good thing, as one Fed bank president has proposed. But maybe more importantly, wages have actually started to rise, putting more money in the hands of workers. And apparently the Fed just can't allow that to happen.