WASHINGTON (Reuters) - Federal Reserve Chair Janet Yellen on Monday argued for a cautious approach to the pace of interest rises in an unusual exchange with U.S. consumer advocate Ralph Nader.
In a letter to Nader, the Fed chair repeated recent statements that the central bank should only gradually raise interest rates.
“An overly aggressive increase in rates ... would at undercut the economic expansion, necessitating a lasting return to low interest rates,” Yellen said in the letter.
Nader published an open letter to Yellen on Oct. 30 that asked her to consider the “humble savers” with money in banks and money market accounts who were “frustrated by the Fed’s low rates and melodramatic debate about when to move higher”.
That letter was signed by the “Savers of America,” and suggested that Yellen, the first woman to head the U.S. central bank, consult her Nobel-prize winning husband George Akerlof about what to do.
“Thank you for your recent letter,” Yellen said on Monday, adding that she and other rate-setters were “very well aware” of savers’ frustrations. She said the fundamental solution to this problem is to foster a stronger economy.
Reporting by Jason Lange and Howard Schneider; Editing by Meredith Mazzilli