In her speech kicking off the Fed's summer retreat, Yellen said that the case for a rate hike "has strengthened in recent months".
It also has a meeting in early November, however, it's unlikely the Fed would raise rates right before the USA elections.
Belisle said the majority of investors expecting a raise in the rate before the end of the year.
European stock markets stirred Friday at the end of a tranquil week as Federal Reserve chief Janet Yellen indicated there was a case for raising U.S. interest rates.
The Fed's strategy to introduce monetary stimulus post-2008 financial crises has been very effective, as it cut the interest rates to near zero, and most importantly, promised to keep them low for a significant time. Based on these projections, the central bank anticipates gradual increases in the federal funds rate over time.
Yellen emphasized that the economy is now closer to the Fed's goals of maximum employment and price stability, hinting a rate hike is likely in the coming months.
In words carefully parsed by market watchers, Yellen said recent months had seen conditions in the USA economy increasingly favor an increase in interest rates but she did not give a clear signal of timing.
Her renewed confidence in the outlook for activity and inflation stems largely from the improvement in labor markets since mid-year and the rebound in household spending.
They said the presidential election likely means the Federal Open Market Committee - the group charged with setting interest rates - will not raise rates before November to avoid appearing political and to avoid what could be a volatile stock market depending on the outcome.
"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", Dye continued in this post. Yellen also noted that while inflation is still running below the Fed's 2 percent target, it is being depressed mainly by temporary factors.
Mirroring the market's swings, the CBOE Volatility index, known as Wall Street's "fear gauge", touched a seven-week high of 14.93.
Whether a move comes in September of December, Yellen maintained the approach the Fed is taking. Investors have been searching for new signals on whether an increase will be on the table at the Fed's September meeting after other officials including New York Fed President William Dudley said it is a possibility.
Even though economic growth has only averaged about 1% this year, Yellen sees the glass half full. She added that the FOMC expected the inflation to rise to 2% over the next few years.