Fed’s Yellen acknowledges risks to ultra-low rates

By Associated Press
Posted Oct. 11, 2010 at 5:31 p.m.

The Federal Reserve’s new vice chairwoman warns that record-low interest rates may give companies an incentive to take excessive risks that could be bad for the economy.

Janet Yellen has supported the Fed’s policy of ultra-low interest rates to bolster the economy and to help drive down unemployment. Her remarks, which don’t change that stance, may be aimed at tempering critics. They worry she’ll want to hold rates at record low levels for too long, which could inflate new bubbles in the prices of commodities, bonds or other assets.

Yellen, who was sworn in as the Fed’s second-highest official last week, makes clear she is aware of the risks. She made her remarks to a meeting of economists in Denver Monday.

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