Fed’s Yellen does not comment on interest rates

Federal Reserve Chair Janet Yellen says central bank prepared to take further action to make financial system safer, however refrains from commenting on monetary policies

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

Finance and Society” conference was held at the International Monetary Fund on Wednesday, Federal Reserve Chair Janet Yellen being one of the key speakers. Yellen said the Fed is prepared to take further measures at the banking sector to make the financial system safer. These comments came as a warning to the banking industry and non-bank lenders.

Yellen pointed out the distorted system of incentives and lack of controls in the financial industry, which are considered to be main reasons of the 2008 financial crisis. She said policymakers should focus more on the entire financial system, rather than focusing only on individual firms, just like it was before the crisis.

Yellen noted all the measures that the Fed and other agencies have taken so far to ensure larger capital buffers, thus making them less risky. Meanwhile, the Fed is developing a “macroprudential tool,” which aims to prevent asset bubbles.

Upon a question, Yellen warned the potential dangers on the equity market valuations. She said equity-market valuations are “quite high” and could be a potential source of financial instability.

TRTWorld and agencies