One by one, several Federal Reserve officials have signaled in recent days that the Fed is ready to resume raising interest rates as soon as this month. The question is whether the official who matters most — Chair Janet Yellen — will add her own voice to that impression.
When Yellen speaks Friday in Chicago on the topic of the Fed's economic outlook, investors will parse her words for any hint of how likely the central bank is to raise its key short-term rate after it next meets March 14-15. Already, though, traders in futures markets have put the probability of a rate hike at 75 percent, according to data tracked by the CME Group. Just last week, that probability had been pegged at well below 50 percent.
But that was before some Fed officials began suggesting that the strengthening U.S. economy, signs of higher inflation and a surging stock market had bolstered the case for a rate hike.
On Tuesday, William Dudley, president of the Fed's New York regional bank and a close Yellen ally, said the case for raising rates had "become a lot more compelling.
On Wednesday, Lael Brainard, a Fed board member and previously a leading advocate of delaying rate increases, said she thought the case for another hike was strengthening.
"Assuming continued progress, it will likely be appropriate soon to remove additional accommodation" by raising rates, Brainard said in a speech at Harvard University.
And Jerome Powell, another board member, was even more specific, saying in a CNBC interview Thursday, "I think the case for a rate increase in March has come together, and I do think it is on the table for discussion."
Earlier in the week, Robert Kaplan, head of the Dallas Fed, said he thought the Fed would likely raise rates "in the near future."
None of which means a rate increase this month is a certainty. Any unexpected wave of poor economic news or worrisome global developments could give the Fed pause. The government's jobs report for February, to be issued March 10, will be of particular interest. But the most recent data — notably on job growth, manufacturing and consumer confidence — along with surging stock prices have been broadly encouraging.
In testimony to Congress last month, Yellen had pointed to the solid job market and overall improving economy to suggest that the Fed would likely resume raising rates within the next few months. Yellen noted that Fed officials themselves in December had predicted three rate increases in 2017. But she offered no specifics on when the next one might occur.
In December, the Fed raised its benchmark rate by a quarter-point to a range of 0.5 percent to 0.75 percent. It was its first increase since December 2015, when the Fed raised its key rate from a record low. In estimating three rate hikes for 2017, the Fed was indicating a quickened pace of increases.
On Thursday, Powell was asked whether the Fed might be inclined to accelerate the pace of increases to perhaps four this year. He replied that he thought three rate hikes in 2017 "still feels about right to me" but added that the direction of the economy would determine the proper number of increases.
Before Fed officials began speaking out this week, many Fed watchers and investors had been doubtful of a rate increase this month. The assumption was that Fed officials would want to assess President Donald Trump's proposed tax cuts and increased spending for the military and infrastructure projects, after the details of those projects and the likelihood of their congressional passage became clear. Many thought the Fed would likely want to wait until June to resume raising rates.
A major reason for the recent signals from Fed officials for a rate increase is the robust job market. On Thursday, for example, the government reported that first-time applications for unemployment benefits — a proxy for the pace of layoffs — fell last week to their lowest level in nearly 44 years.
The stock market, in the meantime, has been setting a string of record highs, fueled by confidence that Trump's plans for cutting taxes and boosting spending will win congressional approval.
And inflation, which had been lagging at chronically low levels, has been edging steadily up, reflecting in part a rebound in gasoline prices and higher wages. The Fed's preferred inflation gauge showed that prices rose 1.9 percent over the 12 months that ended in January. That was the largest 12-month gain in nearly five years and just below the Fed's 2 percent target for inflation.
Various Fed officials suggested that the rise in inflation and the low 4.8 unemployment rate were evidence that the central bank is now close to achieving its dual mandates of maximum employment and stable prices.