Unemployment in the U.S. remains too high for the central bank to raise interest rates, said Janet Yellen, head of the Federal Reserve. Data indicate that a healthy job market may be "more than two years away," she said. The remarks helped boost U.S. stock prices.
Regulators should speed up the process of implementing bank regulations and capital requirements called for by Basel III rules, Federal Reserve Governor Sarah Bloom Raskin said. "It seems obvious to me that uncertainty over that framework is weighing on the balance sheets of banks that will be affected by the rules," she said in prepared remarks, adding that the need to get the regulations right must be balanced against the costs that current delays are imposing.
Blu Putnam, chief economist at CME Group, said U.S. economic activity in the near future likely will be driven by the Federal Reserve's policy of low interest rates. "The zero-interest-rate policy will be the driver for this year and next year, helping the economy do well, so you don't need a [quantitative easing] 3 or anything like that," Putnam said.
The Federal Reserve's aggressive action during the financial crisis averted a worldwide meltdown, Chairman Ben Bernanke said in a third lecture to George Washington University students. He said the threat of a second Great Depression "was very real."
The Federal Reserve recently announced that it expects to maintain short-term interest rates near zero into 2014, prompting concerns among economists. In a survey, many economists said waiting until late 2014 to raise rates would be a mistake. "If the Fed waited that long, it would be too late. I think the Fed will act before then," said Paul Kasriel, chief economist at Northern Trust.