Fed Chairman: Raising Rates Shouldn't Harm Financial Markets
Jerome Powell (chairman of the US Federal Reserve) said that raising the interest rates of the Fed may not pose a big risk for global financial markets and emerging market countries. Moves by the Fed and other major central banks to raise interest rates after a long period of keeping them low should not be disruptive to the global economy. "I do not dismiss the prospective risks emanating from global policy normalization," he said.
According to the politician, although the Fed's interest rate decisions have had a limited impact on capital inflows into emerging and external markets in recent years, there may be some investors and institutions that are not ready to tighten policies.
Jerome Powell also said that the Fed will continue to help strengthen stability in the financial system and will communicate its policy strategy as clearly and transparently as possible to help coordinate expectations and avoid market failures.
After keeping its benchmark interest rate at a record low near zero for seven years following the 2008 financial crisis, the Fed began gradually increasing the rate in December 2015. It made a sixth quarter-point move in March. Many economists believe the Fed will raise rates again in June.