WASHINGTON (AP) – Federal Reserve Chair Janet Yellen said Friday that the Fed is striving to clearly communicate its intentions on interest rates in order to minimize surprises that could disrupt financial markets both in the United States and globally.
She said central bank policymakers understand that moving from a period of very low interest rates to more normal levels of interest rates will lead to some heightened volatility in financial markets.
But she says the normalization of rates will be an important sign that economic conditions are “finally emerging from the shadow of the Great Recession.”
Yellen’s comments came in a speech in Paris at a conference sponsored by the Bank of France. The Fed last week ended its bond buying program but its first increase in rates is not expected until mid-2015.
“As employment, economic activity and inflation rates return to normal, monetary policy will eventually need to normalize too, although the speed and timing of this normalization will likely differ across countries based on differences in the pace of recovery in domestic conditions,” Yellen said.