Paris: Federal Reserve chairwoman Janet Yellen pledged Friday that the US central bank would strive to communicate clearly its strategy to bring its monetary policy back to normal after a long period of easy money.
She told a conference in Paris that "the Federal Reserve will strive to clearly and transparently communicate its monetary policy strategy in order to minimise the likelihood of surprises that could disrupt financial markets, both at home and around the world."
The Fed`s announcement last year that it plans to wind down its asset purchase programme sent the global markets swooning last year with emerging markets hit by a sharp outflow of funds on the prospect of higher interest rates in the United States.
The Fed has now wound down its asset purchase, or quantitative easing programme, and is now set to begin raising interest rates from their record low zero to 0.25 percent next year.
Yellen, the head of the world`s most powerful central bank, said "monetary policy will eventually need to normalise" but noted "the speed and timing of this normalisation will likely differ across countries based on differences in the pace of recovery".
She noted that the recovery from the current crisis has been slower than previous ones because governments are not providing as much fiscal support, with some constrained by the markets to cut back spending to get their debt under control.
Thus central banks "bore the brunt of supporting the economy" with ultra low interest rates and asset purchases, and "the normalisation of monetary policy will be an important sign that economic conditions more generally are finally emerging from the shadow of the Great Recession," said Yellen.
