When US Federal Reserve Chair Janet Yellen spoke at the Jackson Hole Symposium this morning, she was unusually direct on the stronger case for a September rate hike.

While Yellen’s main focus in Wyoming was on the tools needed to ensure a resilient monetary policy framework, she also provided a strong hint of September action: “…in light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months.”

That’s a very direct statement—unusually so for the Fed leader. And it’s very different from her tone after the June Fed meeting, when she was still looking for assurances from the labor market that the economy’s momentum hadn’t fallen off. Since those remarks, two payroll reports have been released, with both showing strong initial job gains (292,000 in June and 255,000 in July).


Yellen’s comments today are very similar to those she made in early December 2015, just before the Fed raised official rates.

In the run-up to the rate hike that December, Yellen had similarly looked for support from coming jobs numbers. Job gain releases of 271,000 in October 2015 and 211,000 in November 2015 seemed to close the deal on that hike.

The initial job numbers we saw this June and July were stronger than the initial gains leading up to the 2015 hike. And in our view, Yellen sent a similar message to markets today—making an official rate hike at the upcoming September Fed meeting a very high probability (barring a surprising slump in August payrolls).

The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.

© AllianceBernstein

© AllianceBernstein

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