Federal Reserve Governor Janet Yallen defends the monetary policy that brought interest rates to current levels corresponding to historic lows of 0-0,25% after the criticisms that had arrived in October from Ralph Nader on behalf of "Savers of America”, according to which the Fed's decisions to keep rates at low levels would have harmed America's savers.
Yellen said she was confident in an improvement in the labor market and that inflation is moving towards the 2% target. "If that happens, my colleagues and I have already indicated that it will be appropriate to start normalizing interest rates." The Fed number one also specified that "the majority" of board members "expect that the pace of normalization will be gradual".
Responding to Ralph Nader's criticisms, the Fed's number one highlighted how the decision to keep interest rates low helped revive the economy after the worst financial crisis since the Great Depression in the 30s. In particular, the economist wrote yesterday in his response, low rates have pushed up the value of real estate and shares, prompting consumers and companies to invest and create jobs. For Yellen with higher rates "unemployment would have risen to even higher levels, house prices would have collapsed further, even more businesses and people would have had to deal with bankruptcies and foreclosures and the stock would not have recovered".
Yellen added, "True, savers could have experienced higher returns from federally guaranteed deposits but those returns were unlikely to offset the dramatic depreciations they would have experienced in the value of their homes or savings."
