Top four central bank chiefs defend stimulus policies FRANKFURT – The leaders of four major central banks on Tuesday defended their sweeping stimulus policies and discussed how words themselves have become a vital tool to guide advanced economies out of the financial-crisis era.

The rare joint appearance in Frankfurt by the heads of the Federal Reserve, European Central Bank, Bank of Japan and Bank of England comes as several of their governors prepare to step down, notably Fed Chairwoman Janet Yellen in February.

They shared a common willingness to pull out all the stops and experiment with unorthodox policies to stimulate their economies and worked closely together at times.

All four have faced political criticism for their actions, which have been unprecedented in both scale and scope.

ECB chief Mario Draghi, who has been dogged by criticism from German officials, hit back on Tuesday, arguing that his critics had faced too little scrutiny.

"It's a minority which has shielded itself from international scrutiny," Mr. Draghi said. German officials have warned that the ECB's ultralow interest rates hurt German savers and pensioners.

As they sought to stem the financial crisis, central banks have made mistakes. Perhaps the biggest misstep was the so-called "taper tantrum" in the U.S., when market interest rates rose sharply in 2013 after former Fed Chairman Ben Bernanke indicated that the central bank's bond-buying program might be wound down.

Ms. Yellen said that market reaction "simply couldn't be understood in terms of the path of our balance sheet."

"What caused the taper tantrum was [that] the timing and character of the communications was unexpected," leading to a significant shift in investor expectations of future interest rates, she said.

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About Kelvin Ching

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