Janet Yellen says rate hike 'appropriate' soon

by Patrick Gillespie and Heather Long   @CNNMoney May 27, 2016: 1:54 PM ET

Three factors that could raise interest rates

Janet Yellen is warming up to the idea of a June rate hike.

Yellen, the Federal Reserve chair, said raising rates in the coming months would be "appropriate." She didn't specifically say June or July.

If the economy stays on track, "probably in the coming months such a move would be appropriate," Yellen told Harvard professor Greg Mankiw at an awards reception in Cambridge, Mass. "The economy is continuing to improve."
Fed committee members besides Yellen have been optimistic about the economy in recent weeks, saying there's a good case to make for raising rates in either June or July.
The economy appears to be picking up momentum this spring. New single-family home sales jumped up significantly in April as did U.S. retail sales, which rose the most in over a year. Wage growth also increased a bit too last month.
On Friday, U.S. economic growth for the first quarter was revised up slightly to 0.8% from 0.5%. The Atlanta Fed forecasts second quarter growth rising close to 3%.

Against that backdrop, expectations have risen for the Fed to raise rates in June. On May 13, Wall Street on placed a 7.5% chance of a rate hike in June. Expectations had risen to 24% before Yellen's speech. After he comments Friday, the odds shot up to 34%, according to CME Group.
Related: Fed official: U.S. is 'basically at full employment'
The Fed raised rates in December for the first time in nearly a decade. It was a landmark moment, a sign of how far the U.S. economy had recovered since the recession. A rate hike -- or multiple hikes -- are a sign that the U.S. economy is nearing full health.
But major headwinds could hold back the Fed form raising rates this year.
China's economic growth continues to slow down, affecting almost all developing countries, which represent a major block of U.S. trade. Concerns are also brewing about the British referendum vote -- Brexit -- on whether to stay in the European Union. The Brexit vote is June 23, only a few days after the Fed's meeting.