Fed officials said in a statement after the June gathering that the economy is rebounding and will continue to expand at a moderate pace.
Yellen repeated at her press conference after the meeting that the Fed is likely to “reduce the pace of asset purchases in further measured steps.” Bond buying has boosted the central bank’s balance sheet to a record $4.38 trillion.
Employment Data
Better-than-expected employment data are bringing forward expectations for higher rates. Unemployment fell to an almost six-year low last month, strengthening the case for officials to raise the main rate earlier than they had forecast.
Payrolls surged in June by 288,000 workers, according to a Labor Department report released last week. The jobless rate fell to 6.1 percent, a level that policy makers didn’t expect to see before the end of the year.
Fed officials predicted at their June meeting that unemployment would decline to 6 percent to 6.1 percent by the end of this year. It was 6.3 percent in April and May.
Central bankers last month also raised their forecasts for interest-rate increases. They estimated the main rate will be 1.13 percent at the end of 2015 and 2.5 percent a year later. In March, they forecast 1 percent at the end of next year and 2.25 percent in 2016.
Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, pulled forward his forecast for Fed tightening by one quarter, to the third quarter of 2015, after the jobs report. Chris Rupkey of Bank of Tokyo-Mitsubishi UFJ Ltd. now expects the first rate increase next March instead of June.