In a speech delivered at the annual meeting of central bankers in Jackson Hole, Wyoming, she also dismissed out of hand the efforts of the republicans and the president from Donald Trump aimed at dismantling the law of financial regulation, Dodd-Frank, passed in 2010. NY time on Friday at the Kansas City Fed's symposium in Jackson Hole.
"We re-learned this lesson through the pain inflicted by the crisis", Ms Yellen said. "The Federal Reserve is committed to evaluating where reforms are working and where improvements are needed to most efficiently maintain a resilient financial system". Public Citizen supports a financial transaction tax to reduce this overheated speculation. Yellen's four-year term is set to end in February 2018. The president wants to unwind the reforms, which could be a factor as he considers who should next lead the central bank.
This morning we'll have the revised GDP data for Germany although, as mentioned earlier, the common currency is likely to remain stuck within a range during the London session ahead of today's Jackson Hole meet in the US. That's not Mr. Trump's style - and Mr. Cohn is more in favour of deregulation - but he likes her dovish approach on interest rates.
USA dollar bulls were looking for some sort of lifeline from Yellen, but with the dollar index dropping 0.47% to 92.835 after she spoke, it was clear to see that she did not get the memo. He also said he thinks the US government will "end up probably terminating" the North American Free Trade Agreement with Canada and Mexico, though he also said he has yet to make up his mind.
-The yield on 10-year Treasuries gained two basis points to 2.19 percent.
S&P 500 Futures Rise After Yellen's Jackson Hole Speech
She insisted there was no evidence that regulatory changes had either acted as a drag on economic growth or hindered the ability of banks to lend.
Yellen said some key policymakers suffer from "fading" memories about the excessive risk that triggered the 2007 financial crisis and subsequent recession, sending unemployment skyrocketing and causing a global economic panic.
She's also supportive of reviewing how certain bank capital requirements can compensate for each other, noting a lack of credit available for people with spotty credit histories and small businesses with limited histories.
The recovery has been painful, said the leader of the federal Reserve, adding that legislators must ensure that they take the necessary means to prevent another financial crisis.
Her comments will be seen as a warning to the White House not to water down regulations put in place after the crisis.