Bloomberg (09/24/14) Jeff Kearns
U.S. Federal Reserve chairman Janet Yellen says that unexpected economic strength could speed up the timetable for increases in interest rates and tighter central bank policy. “The risk is that the Fed ultimately does tighten policy in the way that it’s expecting and is communicating, and markets have to adjust up very quickly in a disorderly way,” says Laura Rosner, a U.S. economist at French bank BNP Paribas SA. Recent Fed statements about maintaining interest rates for a “considerable time” even after the bond-buying program ends has contributed to the market’s stability. “It is important for markets to understand that there is uncertainty and that the statement is not some sort of firm promise about a particular amount of time,” Yellen says.