Fed Chair Cites Stronger Case for Rate Hike
The head of the U.S. central bank says the case for raising interest rates has grown stronger. U.S. Federal Reserve Chair Janet Yellen spoke to top financial officials from around the world Friday at a resort in the western state of Wyoming. She said the continued "solid" performance of the labor market and the outlook for inflation and economic activity mean the Fed could raise rates soon. The bank cut the key U.S. rate nearly to zero in late 2008 and kept it there for seven years. Last December, the Fed raised rates slightly and many economists had been expecting further increases. Fed officials next meet on interest rate issues in late September, and again in November and December. Yellen gave no indication exactly when rates are likely to rise, but officials will likely watch the next unemployment report closely on September 2. White House economic advisor Jason Furman says the United States and other advanced economies have been troubled by slow growth in productivity, a result of weak investment. Earlier Friday, the Commerce Department reported that economic growth in April, May, and June was a little slower than first estimated. The newest data show the gross domestic product expanding at a sluggish 1.1 percent annual rate. IHS Global Insight economists Patrick Newport says growth will probably speed up in the third quarter and notes that consumer spending was a bit stronger. A separate report from the University of Michigan says the newest data show consumer confidence was a little weaker in August than the previous month or the same period a year earlier. But confidence is still at a "reasonably high level." Economists track consumer attitudes closely because consumer demand drives most U.S. economic activity.