Yellen Says Wage Growth Not ‘a Precondition to Raising Rates’

Federal Reserve Chair Janet Yellen said policy makers are watching wage growth for indications inflation may be poised to increase.

“If we did see wage growth pick up that would be at least a symptom that inflation would move up over time,” Yellen said Wednesday in Washington in her first press conference this year. Still, she said, a pickup in wages isn’t “a precondition to raising rates.”

Fed officials today dropped an assurance that the Fed will be “patient” in raising interest rates, opening the door for an increase as early as June. In a fresh set of estimates, they lowered the median forecast for the federal funds rate at the end of 2015 to 0.625 percent compared with 1.125 percent in December.

Wages rose less than expected in February despite another solid month of job gains. Measured on an annual basis, average hourly earnings moved up 2 percent, matching the average increase since the U.S. economic expansion began in mid-2009.

Employers added 295,000 workers to non-farm payrolls in February, more than forecast, and the unemployment rate dropped to 5.5 percent.

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