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Yellen's 'optimal' model calls for rate hike this year, in theory
Federal Reserve Chair Janet Yellen has said the tenor of economic data will decide when the U.S. central bank raises interest rates. Surprisingly, a data analysis based on Yellen's own priorities points to a rate increase by the end of this year. Yellen has cautioned that the economic models built for policymakers amount to mere guideposts in a complicated decision-making process. But she also has placed special emphasis on a set of equations for what she dubbed in a November 2012 speech as "optimal policy" or "optimal control." The equations mimic the churning of a vast economy and project a rate path that gives ... (full story)