Yellen says Fed did not make mistake with December rate hike

Federal Reserve chair Janet Yellen, left, former Federal Reserve chairs Ben Bernanke, center, and Paul Volcker, right, appear together, Thursday, April 7, 2016, in New York.

WASHINGTON (AP) — Federal Reserve Chair Janet Yellen said Thursday that the central bank did not make a mistake in boosting interest rates in December, a move that was followed by significant turbulence in financial markets and further weakening of the global economy.

Yellen said that the U.S. economy remains on a solid course and that she “certainly would not describe this as a bubble economy.”

The current head of the Fed appeared at an unprecedented gathering in New York with the three men who preceded her in the job — Ben Bernanke, Alan Greenspan and Paul Volcker.

She noted that in December the Fed indicated that the pace of future rate hikes would be gradual. That remains the Fed’s expectation, she said.

The central bank’s quarter-point move in December was the first rate hike after seven years, a period during which the benchmark rate was kept at a record low near zero. Many private economists believe the next hike will not occur until June.

While Yellen was quizzed the most about current conditions, she and the former Fed chiefs were all asked to reflect on the pressures that come from holding what is arguably the most powerful economic policymaking job in the world.

Volcker, who pushed interest rates up to levels not seen since the Civil War in order to break the back of double-digit inflation, said the Fed would not have succeeded in that battle without public support.

“People were unhappy with malaise and inflation going up,” Volcker said. “They felt we were doing something.”

The four Fed leaders appeared at an event to launch a speaker’s program honoring Volcker at the International House in New York, a residential dormitory for foreign students. All but Greenspan, who took part by video link, gathered on site at the International House.

Together, the tenures of the four participants cover more than one-third of the Fed’s 102-year history. Their leadership included the double-digit inflation of the 1970s, the global banking and financial market crises of the 1980s and 1990s and, beginning nearly a decade ago, the worst financial crisis and recession since the Great Depression.

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