Yellen cautious, US stocks hit year's high

Federal Reserve Chairwoman Janet Yellen made it clear in a speech on Tuesday that the US central bank will move cautiously on interest-rates hikes.

“Given the risks to the outlook, I consider it appropriate for the Committee to proceed cautiously in adjusting policy,” she said in a speech to the Economic Club of New York.

US stocks responded positively to the speech. The S&P 500 rose 0.9 percent to push the index to the highest close for 2016 and a year-to-date gain of 0.6 percent.

Still, many economists remain skeptical about whether the Fed or other central banks can push economic growth up. From Bloomberg:

Central bankers have managed to steer the world economy clear of a recession while leaving it stuck in the same rut that led to its troubles in the first place.

A torrent of monetary stimulus in recent weeks helped spark a turnaround in financial markets by assuaging investors’ fears of an impending global downturn. Yet it did little to lift hopes among economists of a stronger pickup that would put growth on a more solid footing...

The concern is that policy makers are mainly putting off the pain for now while adding to the difficulties they’ll face later. What’s more, the meager growth they’ve generated means a downside shock still threatens to sink the world into recession, with central bankers already pressing against the limits of their powers.