U.S. Federal Reserve Chair Janet Yellen leaves a news briefing in September 2017

Janet Yellen considers her last act

  • As Janet Yellen’s term ends, the Fed is taking a softer approach
  • The more gradual withdrawal of liquidity may be meant to reassure markets
  • However, it may also reveal a deeper, underlying pessimism about the economy

Janet Yellen has done what was needed to leave behind fond memories after she steps down as chairperson of the United States Federal Reserve early next year. She waited until the American economy gave vigorous signs of recovery and then announced a soft-landing solution to the excessive liquidity inherited from the Ben Bernanke era.

This report argues that Ms. Yellen’s soft approach may originate from a conscious choice to do what financial markets expect her to do. But we also suggest that the encouraging growth data currently pouring out on a weekly basis might not be sustainable, especially in the light of disappointing productivity growth. If Janet Yellen and other central bankers share this worry, their strategy might be governed less by market expectations than by concern about the difficulties ahead. Instead of a half-full glass leading to more monetary rigor, they may be looking at a half-empty glass with cracks too many people pretend to ignore.

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Professor Enrico Colombatto
Perhaps the reason central bankers are still smiling is that they want to keep investors quiet
read more about it in the report
What's inside
  • As Janet Yellen’s term ends, the Fed is taking a softer approach
  • The more gradual withdrawal of liquidity may be meant to reassure markets
  • However, it may also reveal a deeper, underlying pessimism about the economy
Who will benefit?
  • Report is targeted to the decision makers in cross country manufacturing – suppliers, manufacturers, logistics.
  • Also considered useful for the administrative university facilities, to better understand the possibe effects of current decisions.
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