Yellen: Financial stability risks don’t justify rate hikes at this moment


Fed chairwoman pointed out that monetary policy has “major limitations” and regulation should play the lead role in combating excessive financial risk-taking.” Janet Yellen favors the so-called “macroprudential” tools like banking buffer reinforcement rather than ad hoc changes for specific risks.

“I do not presently see a need for monetary policy to deviate from a primary focus on attaining price stability and maximum employment, in order to address financial stability concerns,” said Ms Yellen.

She found appropiate the increasing emphasis on stability when making decisions but pointed out it can only change very rarely.

As for controversial bubbles, Ms Yellen argued monetary policy is a too blunt tool.

This message will encourage markets as rate rises don’t seem to be ahead while it displayed Fed intends to keep banks on a close rein and could affect their profitability.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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