Yellen: March rate hike likely

U.S. stocks were marginally up on Friday, as investors focused on Federal Reserve chair Janet Yellen's speech for clues on the possibility of an interest rate hike later this month. Both men are known as close associates of Fed Chair Janet Yellen. While not specifying how many rate hikes could occur this year, Yellen noted that Fed officials in December had estimated that there would be three in 2017. The large-cap index still held on for its sixth straight weekly gain after reaching a new record high on Wednesday. It's due to be released March 10.

"At our meeting later this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate", Dr Yellen said at a business luncheon in Chicago.

The message from Fed officials, along with data showing stronger inflation and manufacturing activity, has bolstered bets that the Fed would in two weeks make the first of the three rate rises it expects this year.

Yellen noted that various stumbling blocks slowed the Fed's anticipated pace of rate increases in 2015 and 2016, including the oil price crash, a strengthening dollar, market turbulence and a slump in US economic and job growth.

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 almost 44 years.

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Investors took their cash off the table on profit-taking Thursday after the previous day's surge fuelled by Donald Trump's address to Congress, in which he promised massive infrastructure spending and tax cuts.

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.

BOND PRICES: Bond prices fell. That was the largest 12-month gain in almost five years and just below the Fed's 2% target for inflation. Its monetary stimulus is likely to continue and rates will remain at rock-bottom levels through this year. "The Fed is notorious for waiting until the evidence of growth is absolutely undeniable".

Dudley remarked the case for a rate hike had "become a lot more compelling", while Williams said he didn't "see any need to delay".

In December, the Fed raised its benchmark rate by a quarter-point to a range of 0.5 percent to 0.75 percent.

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The U.S. non-farm payrolls next Friday is another crucial factor to decide on the possibility of a March rate hike.

As she did in January, Yellen insisted that the Fed was not behind the curve in raising rates, despite having increased them only twice since the Great Recession ended nearly eight years ago. As a result the United States dollar has also risen.

Other disruptive events past year led the Fed to proceed cautiously.

The Fed is setting the stage for a U.S. USA jobless claims fell to the lowest level in decades last week, strengthening the belief that the central bank is moving closer to achieving its full employment and inflation targets, analysts said.

Investors will be listening for clues Friday on whether the central bank will raise interest rates again later this month. The drop follows comments from Federal Reserve Governor Lael Brainard, who stated that an interest rate increase would likely be sooner rather than later.

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