rate hike

Federal Reserve chair Janet Yellen has defended her decision to keep interest rates low, after consumer advocate Ralph Nader published a letter criticising her judgment.

In response, Yellen argued that the low rates helped create millions of jobs by lowering borrowing costs for businesses and consumers.

“We are tired of this melodrama that exploits so many people who used to rely on interest income to pay some of their essential bills. Think about the elderly among us who need to supplement their Social Security checks every month,” Nader wrote in an open letter on his blog.

In her reply, Yellen said “an overly aggressive increase in rates would at most benefit savers only temporarily”, and that “many of these savers undoubtedly would have lost their jobs or pensions (or faced increased burdens from supporting unemployed children and grandchildren),” if she had not acted as she did.

She used the letter to reiterate once again that, when interest rates do begin to rise, the move will be gradual, citing the Japanese economy as an example of what could happen if rates were raise too fast, too soon.

The consensus amongst analysts is that believe that the Federal Reserve will raise rates by a quarter-point at its December meeting, as long as economic data between now and then remains positive. In England, Bank of England chief Mark Carney expects rates to remain where they are until at least early next year.

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