In a speech in Paris, Federal Reserve Chairwoman Janet Yellen said monetary policy will have to normalize, and that it may lead to financial turbulence. "I continue to anticipate that the headwinds associated with the financial crisis will wane. As employment, economic activity, and inflation rates return to normal, monetary policy will eventually need to normalize too, although the speed and timing of this normalization will likely differ across countries based on differences in the pace of recovery in domestic conditions," she said. "The normalization of monetary policy will be an important sign that economic conditions more generally are finally emerging from the shadow of the Great Recession."
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