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Fed vice chair warns of bubbles
Low interest rates can contribute to financial bubbles even if they are not a primary culprit, Janet Yellen said in her first speech as vice chair of the US Federal Reserve. At a time of growing concern about the international repercussions of another possible round of monetary easing by the US central bank, Yellen’s comments suggested Fed officials are aware of the risks to its zero rate policy. “It is conceivable that accommodative monetary policy could provide tinder for a buildup of leverage and excessive risk-taking in the financial system,” Yellen said to the National Association for Business Economics.