 Federal Reserve Chair Janet L. Yellen speaks at a conference at the Federal Reserve Bank of Boston on Oct. 14. By Ylan Q. Mui Federal Reserve Chair Janet L. Yellen on Friday questioned some of the most fundamental principles of economics, including the nature of inflation and the influence of financial markets, as the central bank navigates the nation's slow-burning recovery. Speaking at a conference organized by the Federal Reserve Bank of Boston, Yellen made no mention of when the central bank might raise its benchmark interest rate. Fed officials have been divided over the right moment to act, with three dissenting from the decision to leave rates unchanged last month. But minutes from the meeting released this week showed several officials were ready to hike "relatively soon" unless the economy weakens. Investors are betting the Fed will raise rates in December, its last meeting of the year. Yellen did not provide any hints about the central bank's thinking. Instead, she focused her remarks on the ways that the Great Recession — and the unexpectedly slow growth that has followed — could reshape economic thinking. "Extreme economic events have often challenged existing views of how the economy works and exposed shortcomings in the collective knowledge of economists," Yellen said. Read the rest on Wonkblog.
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