Interest Rates and Fed

Yellen: Yellen added, however, that the overall risks to financial stability are "moderated, not elevated" and she does not see the hallmarks of any bubbles, according to CBC. Where else can money go She cited one reason stock prices were high: the meagre returns on safer investments such as bonds because of low interest rates. "But there are potential dangers there," Yellen said. Fed could calm anxious markets by raising rates Coupled with weak economic reports in the morning, her remarks drove stocks broadly lower in Wednesday trading. The very low level for short-term and long-term interest rates represented a risk because rates can move rapidly, she explained. "We saw this in the case of the taper tantrum in 2013 where there was a very sharp upward movement in rates," Yellen said. He discussed the possibility that later in the year, the Fed would begin to trim the purchases it was making of long-term bonds, a program designed to keep interest rates low to spur economic growth. The "taper tantrum" occurred when global financial markets were rocked by comments then-Fed Chairman Ben Bernanke made in June 2013. (news.financializer.com). As reported in the news.