Fedchefen Janet Yellen said on Wednesday she does not believe that there will come a new financial crisis during her lifetime, and it is largely due to the reforms of the banking system, made after the crash in 2007-2009.
The she said in a question and answer session in London, according to Reuters.
”I would say that it never ever will come a new financial crisis? You likely know that it would be going too far, but I think we are much safer and I hope it does not happen in our lifetime and I don’t think it will happen,” said Fedchefen.
Janet Yellens comments to be interpreted at least to a certain extent, as a comment to the president of Donald Trump’s plans to withdraw the parts of the tightening of the financial regulation. Fedchefen didn’t want to say something about her relationships with the president, but said she has a good working relationship with the minister of finance, Steven Mnuchin.
According to Bloomberg News pointed out Fedchefen that it would not be good to dismantle the regulations introduced after the crisis.
”We have a more appropriate system for monitoring and control and hopefully we’ll keep it,” she said.
Fedchefen repeated its assessment that the Fed should raise rates only gradually.
”We believe that it is appropriate, in order to achieve our goals, to raise the interest rate gradually to levels likely will continue to be quite low, and even if there is uncertainty about this, they learn to remain low in historical comparison during a long time,” said Janet Yellen.
She also added that the portfolio of securities that the Fed built up during the crisis should be reduced ”gradually and predictably”.
A question about the values in the stock markets responded Fedchefen: ”with the standard looks certain tillgångsvärderingar high, but there is no certainty about it.”
Janet Yellen said that the Fed has a commitment to price stability and the inflation target of 2 per cent. What worries the central bank is on inflation expectations would fold because it can lead to the low inflation become ”endemic and ingrained”.
She added that the decision-makers don’t get to a ”consistent history” of inflation expectations, and they are not sure what type of expectations ”actually means something” – there are no simple answers, according to Janet Yellen.
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