The financial markets and global economies could experience some volatility when the US begins tightening its monetary policy, a top Federal Reserve official warned on Tuesday.
“In the normalizing of its policy, just as when loosening policy, the Federal Reserve will take account of how its actions affect the global economy,” Fed vice chairman Stanley Fischer said.
“The actual raising of policy rates could trigger further bouts of volatility, but my best estimate is that the normalization of our policy should prove manageable for the emerging market economies,” he said in a speech in Israel, according to Reuters.
Fed chairwoman Janet Yellen signaled last week that the US central bank is on track to raise rates this year, despite a weak first quarter.
Fischer, in his speech at the Tel Aviv University, gave no time frame for raising rates, but made it clear that tighter policy is on the way.
“We are working to ensure that our financial institutions and other market participants are prepared for the normalization of monetary policy and the return to a world of higher interest rates,” Fischer said.
“It is equally important that individuals, businesses, and institutions around the world do the same.”
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