Asked whether Fed officials were delivering a coordinated message, Mr. Fischer responded wryly, “If there has been a conscious effort, I’m about to join it.”
The impending rate increase could heighten tensions with the White House, which wants to stimulate growth by cutting taxes, reducing regulation and increasing defense and infrastructure spending. Fed officials have concluded the economy is already growing at something close to the maximum sustainable pace, meaning faster growth should be offset by faster rate increases.
Financial markets, however, are taking the prospect of higher rates in stride. The Standard & Poor’s 500-stock index, which is up more than 11 percent since Election Day, ended trading on Friday mostly flat.
The prospective Fed move has modest short-term implications for consumers. Interest rates on car loans and some kinds of credit card debt will tick upward, but remain at low levels by historical standards. Rates on 30-year mortgages are up by about half a percentage point over the past year.
Rising Rate
The Federal Reserve has only raised its target rate two times in more than a decade.
Federal funds
target rate
Federal funds target rate
The broader consequences depend on the Fed’s ability to raise interest rates without slowing economic growth. The Fed’s goal is to return rates to a level that neither encourages nor impedes economic activity. Over the past century, however, most of the central bank’s attempts to strike that balance have ended in economic recessions.
The American economy is in the midst of one of the longest expansions in the nation’s history, but it is also one of the weakest. The economy expanded by 1.6 percent in 2016, compared with 2.6 percent in 2015, according to the government’s most recent estimate.
Fed officials have concluded, however, that monetary policy cannot deliver faster growth. The Fed’s job is to minimize unemployment and moderate inflation. The unemployment rate, at 4.8 percent in January, is in a range Fed officials regard as healthy, and prices rose 1.9 percent in the 12 months ending in January, the closest the Fed has come since 2012 to hitting its target of 2 percent annual inflation.
In December, the Fed raised its benchmark rate for just the second time since the financial crisis, to a range of 0.5 percent to 0.75 percent, and predicted three increases in 2017.
At the beginning of the week, however, Wall Street analysts and investors did not expect the Fed to raise rates again any earlier than June. The Fed issued a measured statement after its policy meeting in early February, and the meeting minutes, published three weeks later, conveyed little sense of urgency.
Now, after a week of discussions, analysts regard a March increase as highly likely.
Michael Feroli, the chief United States economist at JPMorgan Chase, described the shift in Fed language as “remarkably swift and decisive.” Investors put the chances at almost 80 percent in trading on Friday, according to an analysis of asset prices by CME Group.
Some Fed officials appear particularly focused on the rise of the stock market. William C. Dudley, the president of the Federal Reserve Bank of New York, who described markets as “very buoyant” on Tuesday, has said in the past that if markets did not respond to rate increases, the Fed might need to act more forcefully to tighten financial conditions.
It is also getting harder to dismiss the market’s reaction to Mr. Trump’s victory as a bout of temporary euphoria. Mr. Fischer noted on Friday that the stock market boom was creating wealth that people would begin to spend.
Ms. Yellen pointed to an improvement in the global context. “The prospects for further moderate economic growth look encouraging, particularly as risks emanating from abroad appear to have receded somewhat,” she said.
What Happens When the Fed Raises Rates, in One Rube Goldberg Machine
Exactly seven years ago, the Federal Reserve cut interest rates to almost zero in order to nurse the ailing economy back to health. Recently it changed direction. This is how it works.
The shift in the Fed’s language over the last week also may reflect a recognition that market expectations were not keeping pace with the Fed’s evolving view of the economy. Ms. Yellen, in a February appearance before Congress, hinted that the Fed might be providing a little too much stimulus, describing the Fed’s policy as “accommodative.” But at the start of this week, investors still put a low probability on a March increase.
Markets are wary of the Fed’s flirtations with interest rate increases, as the central bank in recent years has often found reasons for last-minute postponements.
This time, the Fed chose to overwhelm any lingering doubts.
On Tuesday, Mr. Dudley told CNBC that the case for a rate increase “has become a lot more compelling.”
On Wednesday, Lael Brainard, a Fed governor who has been one of the most consistent supporters of raising interest rates slowly, suggested that she too was ready to act.
“We are closing in on full employment, inflation is moving gradually toward our target, foreign growth is on more solid footing, and risks to the outlook are as close to balanced as they have been in some time,” Ms. Brainard said at Harvard’s Kennedy School of Government. “Assuming continued progress, it will likely be appropriate soon to remove additional accommodation, continuing on a gradual path.”
Fed officials often bury their latest views on monetary policy at the end of their speeches. Ms. Brainard’s remarks came at the beginning, so that no one missed the point.
On Thursday, another Fed governor, Jerome H. Powell, issued a similarly blunt notice of intent in an interview with CNBC. “I think the case for a rate increase for March has come together, and I think it’s on the table for discussion,” he said.
Then came Friday, the last day on which Fed rules allowed officials to comment on monetary policy before the March meeting, and Ms. Yellen delivered the last word.
“At our meeting later this month,” she said, “the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate.”
The committee is scheduled to meet in Washington on March 14 and 15.
