This morning at the annual Federal Reserve retreat at Jackson Hole, Wyoming, FOMC Chairwoman Janet Yellen delivered a speech titled “The Federal Reserve’s Monetary Policy Toolkit: Past, Present and Future.” The bulk of the speech was focused on possible tools the Fed could use to fight the next recession. In her opening remarks, Janet Yellen did make two key statements about the near-term outlook for Federal Reserve interest rate policy. First, she said, “the FOMC continues to anticipate that gradual increases in the federal funds rate will be appropriate over time.” Second, she continued with, “…the case for an increase in the federal funds rate has strengthened in recent months.” Yellen’s second statement is consistent with several other recent statements by various FOMC members who said that they anticipate raising the fed funds rate in the not too distant future. So, Janet Yellen has reconfirmed her view on the appropriate path of interest rates (higher), and she has told us that we are approaching the conditions necessary for a rate hike. But she has not told us when the next rate hike will occur. The policy actions of the Yellen Fed remain highly data-dependent. I continue to believe that the August employment data, released next Friday, September 2, will be an important factor for the Fed to consider. If we see another strong month of job growth, after better-than-expected results for June and July, then the odds of a September 21 fed funds rate hike will increase. 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. According to the fed funds futures market, the odds of a September 21 fed funds rate hike are 18 percent. I believe that this is too low and I suggest that the odds are now closer to 33 percent.