Fed chair Janet Yellen defends low interest rates amid concern over frothy prices

Janet Yellen at the Senate banking committee
Federal Reserve chair Janet Yellen held the line during a grilling from US politicians yesterday, arguing that the economic climate meant that very low interest rates were still appropriate.

“If the Fed [and Yellen] is going make a change in rhetoric, it is likelier to come at the September meeting, because that is the next time the Fed updates its forecasts and holds a press conference,” said Joseph LaVorgna of Deutsche Bank.

The Fed chair gave some new signals that the central bank was concerned about financial stability and frothy asset prices, arguing that “valuations of smaller firms as well as social media and biotechnology firms appear to be stretched”.

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