Yellen Says Fed Doesn’t See Any Sign of Puerto Rico ‘Contagion’

Federal Reserve Chair Janet Yellen said the central bank is monitoring Puerto Rico’s fiscal crisis and doesn’t see any sign of risk spreading to the broader municipal bond market.

“What we’ve been doing is, obviously, monitoring developments in Puerto Rico which are economically very difficult,” Yellen said in response to a question during testimony before the House Financial Services Committee. “We’re looking to see, are there risks that are being transmitted to the broader municipal debt market, and we’re not seeing signs of contagion.”

Officials of U.S. commonwealth are seeking to restructure its $72 billion debt, saying the Caribbean island cannot afford to repay all its obligations on time.

“I think it’s appropriate for Congress to consider what’s best to do in this case,” Yellen said.

“It’s something the Federal Reserve can’t and shouldn’t be involved in.”