Tuesday, 26 November 2013
Fed still has more help to offer the economy says Janet Yellen
Janet Yellen said in prepared remarks to be delivered in a confirmation hearing on Thursday that the Federal Reserve helped restart the economy after the recession, but still there’s more work to be done.
“We have made good progress, but we have farther to go to regain the ground lost in the crisis and the recession,” reads the statement.
Yellen is at present serving as vice-chair on the Federal Reserve Board, she is nominated by President Obama to succeed Ben Bernanke as head of the central bank.
Bernanke’s second term ends January 31, and in spite of the protests from a few Tea Party members, Yellen is mostly anticipated to be long-established for the position before then. Ten in the morning Eastern, Thursday, her hearing before the Senate Banking Committee is scheduled.
Her comments don’t get into particulars about the Fed’s existing bond-buying program, however simply stress her commitment to “supporting the recovery,” toting up more openness and transparency to the Fed’s communications, and endorsing financial stability.
Since December 2008, the Federal Reserve has been trying to encourage the economy. In an attempt to lower long-term rates as well, that’s when it cut short-term interest rates to near zero and launched its first bond-buying spree.
The Fed is occupied in its third round of bond-buying, in which it purchases $85 billion each month in Treasuries and mortgage-backed securities five years later.
Yellen is currently daunting task if she’s established to serve as the next Federal Reserve chair: How to wean the economy off Fed stimulus at the right time.
Liberal economists dispute that if the Fed discontinues its stimulus too soon, job growth may well carry on at a devastatingly slow pace. The economy may still be too breakable to construct momentum on its own.
However, conservatives argue, that the Fed has done enough by now. They say inflation could take off rapidly, much of the Fed’s $3 trillion in stimulus over the last five years is still sitting idle in bank reserves, and if that money ever floods into the broader economy.
Yellen have a propensity to favor with the liberals and in Fed circles, she’s recognized as inflation “dove.” Her main goal, expressed in numerous speeches, is to get Americans back to work, and in her view, the Fed still has tools to improve the unemployment rate from its current level of 7.3%.
“Unemployment is down from a peak of 10%, but at 7.3% in October, it is still too high, reflecting a labor market and economy performing far short of their potential,” she said in her prepared remarks.