Yellen Says Financial Stability Shouldn't Depend on Where the Fed Sets Rates

NEW YORK (TheStreet) -- Federal Reserve Chairman Janet Yellen reminded investors Wednesday that the central bank's main monetary policy tool, setting the federal funds rate, shouldn't be what ensures market stability.

Speaking at the International Monetary Fund in Washingto, the Fed chairwoman argued that promoting stability through interest rate adjustments would increase inflation and employment volatility. Yellen also said central bankers shouldn't necessarily alter interest rates as a direct response to a shift in stability.

"As a result, I believe a macroprudential approach to supervision and regulation needs to play the primary role," Yellen said to an audience at the IMF.

Despite her views on financial stability and the role of rate-setting policy, Yellen said the Fed should continue to communicate clear monetary policy to the market.

-- Written by Joe Deaux in New York.

>Contact by Email.

If you liked this article you might like

Monster Beverage Stock Soars as Coca-Cola Opens Refreshing Partnership

Gold Pares Losses as Ukraine Says Its Troops Attack Russian Convoy

Cisco Stock Biggest Dow Loser as Company Cuts 6,000 Jobs

Gold Demand Slumps as Increasing Prices Slow Asian Demand

Gold Demand Shrinks a Year After the Infamous Market Collapse