Fed Actions Show Confidence but Are Not at Trump Speed

The administration has not ruled out a second term for Ms. Yellen, but Mr. Trump said on the campaign trail that he would “most likely” pick a new person. Ms. Yellen’s management of monetary policy may matter less than her disagreements with Mr. Trump about regulatory policy and Mr. Trump’s preference for people he knows.

Ms. Yellen said Wednesday that she had not had any conversations with the administration about its plans. She declined to comment on her interest in a second term.

If Ms. Yellen is replaced, she would become the first Fed leader in 40 years to serve only a single term. The last three leaders — Ben S. Bernanke, Alan Greenspan and Paul A. Volcker — were renominated by a president of a different party.

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Why the Fed Raised Rates

The Federal Reserve raised interest rates for the third consecutive quarter.



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The Fed has increased its benchmark interest rate by a full percentage point over the last two years, after leaving the rate close to zero from late 2008 to late 2015.

Ms. Yellen and her colleagues have concluded that the economy is growing about as fast as it can. Low rates encourage borrowing and risk-taking; the Fed is now trying to raise rates to a level that neither encourages nor discourages economic activity. Most Fed officials expect that the Fed will raise rates at least one more time this year.

So far, however, financial markets are not cooperating. Interest rates on auto loans have increased a little since the Fed started raising rates in 2015, but rates on mortgage loans are about the same. Rates on some corporate loans have even declined. Measures of financial conditions have loosened.

The march toward that neutral stance reflects the Fed’s upbeat view of economic conditions. “The labor market has continued to strengthen,” the Fed said in a statement published at the end of a two-day meeting of its policy-making panel, the Federal Open Market Committee.

The Fed added that economic growth “has been rising moderately so far this year,” making no mention of weakness during the winter.

The Fed in recent years has been…

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