During a two-day conference sponsored by the Federal Reserve, the European Central Bank and the Federal Reserve Bank of New York, Federal Reserve Chair Janet Yellen said it is time for the Fed to start focusing on globalization. Yellen said that the Fed’s ability to fulfill its mandates for full employment and price stability depends on understanding global markets and how U.S. policy affects other economies around the world.
“Because the economy and financial system are becoming increasingly globalized, fulfilling these objectives requires us to achieve a deep understanding of how evolving developments in financial markets and economies around the world affect the U.S. economy,” Yellen said at the Global Research Forum on International Macroeconomics and Finance in Washington.
Central banks worldwide face varying policy needs as the U.S. and U.K. near the time to raise rates and the ECB and Bank of Japan begin new efforts to prevent stagnation, Bloomberg reports.
The Federal Reserve remains poised to start raising U.S. interest rates by mid-2015, according to a Reuter’s poll of economists, but at a pace that’s well short of the Fed’s expectations. Twenty-four of forty-three economists polled by Reuters said the Fed will likely start raising short-term interest rates in June of next year. Seven expected an earlier start, while eleven believed the first rise will come in September or later. The median forecast of 38 economists for the federal funds rate at the end of 2016 was 2.20%, compared with the Fed’s median forecast of 2.88%. Economists also had a lower forecast for 2017, at 3.30%, than the Fed, which expects 3.75%.
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