Talking Points:

– Fed Chair Yellen speaks to need for rate normalization over course of 2017.

– The Fed chair also says that that she doesn’t see evidene that Fed “has fallen behind the curve.”

– All signs point to the February US Nonfarm Payrolls report being the final piece of the puzzle to get the Fed to hike on March 15 – we’ll be covering the US labor data live on March 10 at 8:15 EDT/12:15 GMT.

Federal Reserve Chair Janet Yellengave her clearest indication yet that the central bank is prepared to raise the federal funds benchmark interest rate at the FOMC meeting taking place on March 15. This month will mark the first hike to occur among several more in the year. Fed Chair Yellen stated, “given how close we are to meting 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.”

The only possible adverse development between now and the Fed meeting, at least from an economic data point of view, would be if the February US labor market report disappoints significantly next Friday.

Over the course of her speech, the Fed Chair went on to explain why the Fed has been more dovish in the past few years. She stated that “a series of unanticipated global developments beginning in the second hald of 2014… ended up having adverse implications for the outlook for inflation and economic activity in the United States, prompting the FOMC to remove monetary policy accommodation at a slower pace than we had anticipated in mid-2014.”

Speaking to the notion that the Fed will raise rates multiple times this year, Fed Chair Yellen noted that “the process of scaling back accommodation likely will not be as slow as it was during the past couple of years.” Fed fund futures contracts were quick to price in the commentary, with the odds of a March rate hike rising to 98%, the odds of a second rate hike in September rising to 76%, and the odds of a third rate hike this year in December rising to 56%. Indeed, this was the icing on the March rate hike cake.

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