Federal Reserve Flexible on Rate Rise

• 02.25.2015, 18:38
•  America,  World

The head of Federal Reserve Janet Yellen said that the Fed can be flexible in its decision to raise interest rates, which have been near zero since 2008 – the year that was very critical for the US economy and since that time the economy has been improving. However the level of employment continued to be the same, being sensitive to the economic crisis. Janet Yellen said that too many people in America remain unemployed or underemployed. She also added that investors were not motivated to start active business with the Fed anytime soon, which shows that a rate rise seems doubtful before June. Ms Yellen explained the situation as a cause of weakened economic and political situation abroad. According to her, foreign fragile economy could cause risks for US economic growth – meaning the slowdown in China and the weakened eurozone. The head of Fed suggested that the growth of eurozone could help the US economy to improve and vice versa. According to her the decline of oil prices could have very positive effect on US economic output.

On the other hand A Democrat from Ohio opposed the statements made by Fed, explaining that monetary policy adopted by Fed is politicized, BBC reports.

There could be something true about the Democrat’s statement. Although the oil prices are going down, which leads production to boost, but at the same time the wages in oil sector went down , as well as the number of unemployed people in this sector crossed the red line not only in US, but all over the world. As it is clear from the words of Ms Yellen the weakened foreign economy has negative effect on the US economy, because of the globalization. Although the Fed can control the rise of interest rate, comprehensive economic situation depends on many aspects, in this case oil dropped prices and unstable foreign economies.