Global risks will not have a major impact on the U.S. economy, but it is still important “caution” approach to raising interest rates. About this stated the head of the fed Janet Yellen, speaking at the economic club of new York.
“I believe it is appropriate for the continuation of a cautious adjustment of monetary policy. This caution is especially justified, because with such a low base rate the opportunity of the Committee on open market operations [of the FOMC] the use of traditional monetary policy in response to economic problems is asymmetric,” said Yellen.
Two weeks ago, the operations Committee on the open market completed a two-day policy meeting, which decided to leave benchmark interest rate unchanged at 0.25-0.5%.
In December 2015 the fed for the first time since 2006 raised its key interest rate by 25 b.p. The regulator explained the decision by saying that the U.S. economy is strong enough to start normalizing monetary policy. The fed chief Janet Yellen in the December press conference hinted at the possibility of further rate hike in 2016. However, during the first two meetings of 2016 the fed are unable to continue to normalize policy.