Fed Chair Yellen says a March rate hike is on the table.

Federal Reserve Chair Janet Yellen says a March rate hike is on the table.

At a speech before the Executives Club of Chicago, Yellen said, “given how close we are to meeting our statutory goals, and in the absence of new developments that might materially worsen the economic outlook, the process of scaling back accommodation likely will not be as slow as it was in 2015 and 2016.”

Adding that, “In short, we currently judge that it will be appropriate to gradually increase the federal funds rate if the economic data continue to come in about as we expect. Indeed, 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.”

And so for the markets, March is likely a done deal after Yellen’s comments.

Ahead of this speech, Fed Funds futures data from the CME Group implied a 75% chance the Fed would raise interest rates in its next policy statement on March 15. Data from Bloomberg suggested a 90% chance of a hike from the Fed.

Following the speech, Ian Shepherdson, an economist at Pantheon Macro, said, “In one line: They’ll hike this month unless payrolls are disastrous.”

This would be the third interest rate increase for the Fed since the financial crisis, and the second in three months. At the outset of the year, Fed projections forecast three rate hikes in 2017 while many in markets believed we’d likely see one or two hikes. In each of 2015 and 2016, the Fed raised rates just once.

Following Yellen’s comments, U.S. stocks remained roughly unchanged after having traded just slightly in negative territory earlier in the session.

Meanwhile, interest rates continued to back up, particularly on the short end of the yield curve with the U.S. 2-year Treasury note trading at its highest since June 2009 after the text of this speech was released. The 10-year Treasury was trading right at 2.5% while the 30-year was at 3.1%.

Earlier this week, markets reacted to comments from New York Fed president Bill Dudley and Fed governor Lael Brainard, both of whom seemed to indicate a March rate hike would be justified.

Dudley told CNN, the case for tightening monetary policy “has become a lot more compelling,” according to Reuters.

Myles Udland.

Full story at Yahoo News.