Federal Reserve chair Janet Yellen reiterated again on Friday that an interest-rate increase continues to be closely considered by policymakers as they watch a wide array of broad economic trends to shape their decisions.

During the Fed’s annual retreat to picturesque Jackson Hole, Wyo., Yellen made a presentation titled, “Designing Resilient Monetary Policy Frameworks for the Future,” outlining what the Federal Open Market Committee (FOMC) is seeing and how that’s impacting potential decisions to be announced during its remaining official meetings for 2016.

“Looking ahead, the FOMC expects moderate growth in real gross domestic product (GDP), additional strengthening in the labor market, and inflation rising to 2 percent over the next few years,” Yellen said during her presentation posted on the Fed’s website. “Based on this economic outlook, the FOMC continues to anticipate that gradual increases in the federal funds rate will be appropriate over time to achieve and sustain employment and inflation near our statutory objectives.

“Indeed, in light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months. Of course, our decisions always depend on the degree to which incoming data continues to confirm the committee’s outlook,” she went on to say in comments available here.

What Yellen told the gathering fell in line with what Comerica Bank chief economist Robert Dye expected a week ago when he posted his regular commentary.

“The minutes of the July 26-27 FOMC meeting, along with comments by Bill Dudley of the New York Fed, created some buzz about the possibility of a Fed funds rate increase in September,” Dye said. “However, this is still a very divided FOMC. The minutes make clear that there is a significant faction within the FOMC that will not favor raising the Fed funds rate in September.

“We see no reason why FOMC chairwoman Janet Yellen would firm up her intention to raise the Fed funds rate five weeks ahead of the next FOMC meeting,” he continued. “Rather, she will likely wait until she has had face-to-face discussions with FOMC members at the Fed’s annual retreat in Jackson Hole, Wyo., and then wait further until after the August jobs data is released on Sept. 2, before she sets her intentions for the September FOMC meeting.”

Dye pointed out that according to the Fed funds futures market, the odds of a rate hike in September are up to 18 percent.

“We continue to expect only one fed funds rate hike this year in December,” Dye said.

But then Dye added in a blog post after Yellen’s remarks, “I believe that this is too low and I suggest that the odds are now closer to 33 percent.

“If we see another strong month of job growth, after better-than-expected results for June and July, then the odds of a Sept. 21 fed funds rate hike will increase,” Dye continued in this post. “Conversely, a weaker-than-expected result next Friday would diminish the odds of a September rate hike.

“I believe that if we see payroll job growth north of 200,000 for August, then after the Labor Day holiday we will hear comments from various FOMC members that will more strongly hint at a September rate hike,” he added. 

Whether a move comes in September of December, Yellen maintained the approach the Fed is taking.

“Although fiscal policies and structural reforms can play an important role in strengthening the U.S. economy, my primary message today is that I expect monetary policy will continue to play a vital part in promoting a stable and healthy economy,” Yellen said.

“New policy tools, which helped the Federal Reserve respond to the financial crisis and Great Recession, are likely to remain useful in dealing with future downturns,” she continued. “Additional tools may be needed and will be the subject of research and debate.

“But even if average interest rates remain lower than in the past, I believe that monetary policy will, under most conditions, be able to respond effectively,” Yellen went on to say.