No doubt about it: The Federal Reserve’s record low interest rates over the last few years have led some investors to take on riskier investments in search of higher returns. This is part of the reason why stocks keep reaching record highs, demand for corporate bonds is rising, and volatility in the financial markets is low.
Even so, Federal Reserve Chair Janet Yellen says she’s not about to have the Fed raise interest rates merely to burst bubbles. Rather, whenever the Fed decides to raise rates, it will be because the central bank has achieved its other two primary goals: a healthy U.S. job market and stable prices, with inflation rising around 2% a year.
“I do not presently see a need for monetary policy to deviate from a primary focus on attaining prices stability and maximize employment, in order to address financial stability concerns,” Yellen said in a lecture at the International Monetary Fund in Washington, D.C. Wednesday.