Janet Yellen, the Federal Reserve’s current Chair, spoke on March 31 at the National Interagency Community Reinvestment Conference in Chicago on what the Fed is doing to promote a stronger job market.
Two weeks ago, at the press conference held pursuant to the FOMC meeting, Yellen had suggested that interest rates could start rising six months after the Fed’s bond purchase program ends. That would mean if tapering continues as planned, rates would begin rising next spring—far earlier than expected. The uncertainty surrounding the FOMC announcement led to a spike in bonds yields, leading to a fall in bond prices (bond yields and prices share an inverse relationship). The fall impacted popular bond exchange-traded funds (or ETFs) like the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) and the SPDR Barclays High Yield Bond (JNK), which fell 0.51% and 0.34%, respectively. The Dow Jones industrial average index (DJI), which includes companies like Microsoft Corporation (MSFT) and Johnson & Johnson (JNJ), also dropped, by 0.8%.
Yellen began by addressing her audience about what the Fed is doing to help the nation recover from the financial crisis and the Great Recession.
Strengthening the financial system
The Fed has made an effort to strengthen the financial system. New rules have been put in place to better protect consumers and ensure that credit is available to help communities grow.
Yellen highlighted that the Fed promotes community development by fostering dialog and supporting the work people do in their communities. The Fed ensures that credit is available for families to buy homes and for small businesses to expand. Among other things, programs such as the organizations sponsor program help make communities safer and families healthier and financially more secure. Also, they help people meet the demands of finding a job in a challenging economy. And that help is crucial.
Yellen believes that finding a job in a challenging economy can’t succeed without two other things. Find out more in the next part of this series.