Wednesday, 22 November 2017 07:55 WIB |
FISCAL & MONETARY |Yellen
Federal Reserve Chair Janet Yellen cautioned that raising interest rates too quickly risked stranding inflation below the U.S. central bank™s 2 percent target and said there™d been œsome hint that expectations for future price increases may be drifting down.
œIt can be quite dangerous to allow inflation to drift down and not to achieve over time a central bank™s inflation target, she said Tuesday, while also discussing perils of leaving rates too low for too long.
œOne reason it™s dangerous is because inflation expectations are likely to also drift down and indeed there is some evidence -- I don™t really think they™ve drifted down very much -- but there™s some suggestion, they may be drifting down, she said at an event at New York University moderated by former Bank of England Governor Mervyn King. œThat would be a very undesirable state of affairs.
The Fed announced Monday that Yellen, 71, would step down once current Fed Governor Jerome Powell -- who President Donald Trump nominated to replace her when her term expires in February -- is confirmed by the Senate and sworn into office.
Yellen, Powell and the rest of the U.S. central bank™s policy-setting Federal Open Market Committee are attempting to guide interest rates back to what they deem a more neutral level after years of keeping them near zero to combat the effects of the financial crisis.
Source : Bloomberg