WASHINGTON (AP) – Janet Yellen has won credit for guiding the Federal Reserve’s first six months of transition from the Ben Bernanke era. Bernanke’s Fed had steered the economy through a deep crisis by slashing interest rates and restoring confidence in banks. Yellen has so far carried on his approach with barely a hiccup.
She may one day recall her first six months as a too-brief honeymoon.
The perilous question that now awaits Yellen’s Fed has put investors on nervous alert: Can it manage to raise rates from record lows without weakening the U.S. economy or spooking markets?
Or, conversely, will it wait too long to raise rates, causing the economy to overheat and inflation to surge?
No one knows. Which helps explain the anticipation surrounding Yellen’s speech Friday at the economic conference sponsored every August in Jackson Hole, Wyoming, by the Federal Reserve Bank of Kansas City. Given that this year’s topic is labor markets, Yellen is sure to spell out her latest assessment of the U.S. job market.