If you think that Greece and China are going to keep the Federal Reserve from starting to raise interest rates later in 2015, you might want to see what Chair Janet Yellen’s latest commentary on the matter is. Yellen was speaking at the City Club of Cleveland on Friday. Her view: get ready the interest rate hike cycle this year.

Before you hit the panic button and decide to sell out of all of your bond assets, you might also want to pay attention to the degree to which those rates are likely to be raised.

Yellen said:

My own outlook for the economy and inflation is broadly consistent with the central tendency of the projections submitted by FOMC participants at the time of our June meeting. Based on my outlook, I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy. But I want to emphasize that the course of the economy and inflation remains highly uncertain, and unanticipated developments could delay or accelerate this first step …

Let me also stress that this initial increase in the federal funds rate, whenever it occurs, will by itself have only a very small effect on the overall level of monetary accommodation provided by the Federal Reserve. Because there are some factors, which I mentioned earlier, that continue to restrain the economic expansion, I currently anticipate that the appropriate pace of normalization will be gradual, and that monetary policy will need to be highly supportive of economic activity for quite some time. The projections of most of my FOMC colleagues indicate that they have similar expectations for the likely path of the federal funds rate. But, again, both the course of the economy and inflation are uncertain. If progress toward our employment and inflation goals is more rapid than expected, it may be appropriate to remove monetary policy accommodation more quickly. However, if progress toward our goals is slower than anticipated, then the Committee may move more slowly in normalizing policy. [Emphasis added.]

FULL SPEECH

Anyhow, the verbiage from Friday should be no shock to most market participants. Still, it does indicate that the tea leaves in mid-July are pointing to Fed rate hikes beginning as planned later in 2015. Fed fund futures currently are factoring in the first 100% of a rate hike in December — later than the September timing that had previously been expected before Greece and China came into play. There is also currently not a 100% chance factor in for the fed funds to raise to 0.50% until May of 2016.

Two caveats for those would-be hike chances: The first hike percentage is so close that it could be November of 2015, and the second is so close that it could be March of 2016. Lastly, remember that fed funds futures is a live market so those can change any time.

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