Yesterday during her meeting with educators, Fed Chair Janet Yellen expressed her concerns about US long-term economic outlook.
Janet Yellen spoke about Fed role
Ms. Yellen was asked what teachers should tell their students to get them excited about central banking matters. Fed Chairwoman has responded by saying “tell them about fighting financial recessions.” Moreover, she has stressed that this is the initial reason Federal Reserve was created.
These remarks came as a rare scene for the audience, where usually central bankers do not talk about the responsibilities of Fed. Janet Yellen has added:
“This critical role of central banks as a lender of last resort is something that never got any attention when I taught money and banking.”
Moreover, Ms. Yellen also highlighted that she hopes that central banking would not be very interesting in the future. She explained that in case Fed does its job properly, then “instead of being on Page 1, we can be back on Page 19 in the newspapers.”
Yellen concerned about US long-term economic outlook
While talking about the economic forecast for the US, Janet Yellen stated that the economy “is doing quite well” currently. However, she mentioned that in the “long term, I think there are quite serious problems.”
Ms. Yellen talked about productivity, stating that automatically determines the living standards. She stated that the productivity across the US has advanced in the recent years. Moreover, Fed Chair has stated:
“I also worry a great deal about inequality.”
She added that the biggest economic gains are directed to the wealthiest across the states. However, the percentage of the young population doing the same or better than their parents has diminished sharply.
However high expectations were prior to her speech, Ms. Yellen did not talk about the Fed’s plans for the interest rates. Nevertheless, her positive remarks in relation to the US economy suggested that Fed’s agenda on interest rates did not change since December meeting. That time, policymakers decided on three rate hikes throughout 2017.
The president of the Federal Reserve Bank of Philadelphia, Patrick T. Harker, has stated that he anticipates three rate hikes in 2017 in consensus with the Fed authorities.
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