Federal Reserve officials are still in damage control mode , after comments about winding down stimulus frazzled markets last week.
Jeremy Stein, a Federal Reserve Board Governor, noted Friday that investors may have overreacted after Fed Chairman Ben Bernanke said the central bank may start slowing its stimulus program later this year.
Initially, stocks fell and bond yields rose following Bernanke’s press conference last Wednesday. Since then, the 30-year mortgage rate spiked from 3.9% to nearly 4.5% — its biggest one-week gain in 26 years.
But Stein urged the public not to read too much into the volatility.
Consumers and businesses “should take care not to over-interpret these movements,” he said in prepared remarks. “We have attempted in recent weeks to provide more clarity about the nature of our policy reaction function, but I view the fundamentals of our underlying policy stance as broadly unchanged.”
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