This week US Fed Chair Janet Yellen appeared before the U.S. House Financial Services Committee to deliver a semi-annual Monetary Policy Report to Congress. The meeting comes at a time when global markets have entered a period of volatility shortly after The Fed increased rates in December last year after almost a decade of leaving them at near-zero.

In a statement to Congress the Fed Chair stated that since the December rate rise, "financial conditions in the United States have recently become less supportive of growth, with declines in broad measures of equity prices, higher borrowing rates for riskier borrower, and a further appreciation of the dollar" but reaffirmed its expectation of "gradual increases" in interest rates during 2016.

In its justification for the December 2015 increase of 25 basis points, The Fed stated that it expected that "economic activity will expand at a moderate pace and labor market indicators will continue to strengthen". The rate increase sparked a share market sell-off none the least being that of Deutsche Bank dropping nearly 15% prompting its co-CEO John Cryan to reassure investors that the bank's funding remained "Absolutely, rock solid."

In January, The Fed instructed US banks to engage in what it called the "Comprehensive Capital Analysis and Review (CCAR) and Dodd-Frank Act stress test". This review is essentially a theoretical exercise to determine whether US banks have a sufficient capital adequacy buffer to withstand a financial crisis. In a possible sign of reversal of interest rate direction the worse case scenario being tested is that of a global recession with US unemployment rising to 10% accompanied by "a heightened period of corporate financial stress and negative yields for short-term U.S.Treasury securities."

Currently the European and Japanese Central Bank's are the first of the major central banks to set negative interest rates.