On June 27, 2017 US Federal Reserve Chair Janet Yellen took part in a discussion at the British Royal Academy. Her comments aroused optimistic sentiment among global investors. The thing is that the central bank chief made a bold prediction that another financial crisis like the one which hit the markets in 2008 would not break out for as long as she lives. "I do think we're much safer and I hope that it will not be in our lifetimes and I don't believe it will be," she said.
The US Fed Chair is certain that American banks are much stronger this year. She drew this conclusion as recently US banks had passed the first round of the Fed’s stress tests to see how they would operate under adverse economic conditions. All of the financial firms coped well. Besides, the policymaker praised the central bank for its positive contribution, when dealing with the crisis. It would have been "worse than the Great Depression" without the Fed's intervention, Yellen said. The Federal Reserve brought stability to the banking system. She also reiterated her view that the central bank would continue to raise interest rates gradually.
Market participants were eager to find out a reply to an important question about Fed’s plans on bonds worth a few trillion dollars which have been amassed on Fed’s accounts. Janet Yellen said that the stockpile of bonds would be shrunk "gradually and predictably." For your reference, in March the US regulator increased its funds rate by 25 basis points to 1-1.25% for the second time this year. Importantly, the central bank does not rule out the third rate hike until the year end.
