clear
Friday February 5th, 2016 10:05PM

Yellen stands by Fed's low interest rate policies

By Ken Stanford Reporter
WASHINGTON (AP) -- Janet Yellen said Thursday that the U.S. economy has regained ground lost to Great Recession but still needs the Federal Reserve's support because unemployment remains too high at 7.3 percent.

Yellen made those comments in testimony to the Senate Banking Committee, which is considering her nomination to be the next chairman of the Federal Reserve.

Her remarks suggest that she plans to stand by the Fed's extraordinary low interest rate policies begun under current Chairman Ben Bernanke until the economy shows further improvement.

The Fed's support of the recovery is the "surest path to returning to a more normal approach to monetary policy," Yellen said during a roughly two-hour hearing that was relatively free of tense moments.

Despite some tough questions from Republicans about the Fed's policies, Yellen drew praise from members of both parties. Her nomination is expected to be advanced by the committee and confirmed later by the full Senate, making her the first woman to lead the powerful central bank.

"We have the utmost respect for you," Sen. Joe Machin, a centrist Democrat from West Virginia, told Yellen.

Sen. Bob Corker, R-Tenn., told Yellen that he appreciated her "candor and transparency," and thanked her for giving him the same answers during the hearing as she had during a meeting with him in his office.

The Fed's policies, which include three rounds of bond purchases, are credited with helping boost economic growth and lower unemployment. But they have also driven up stock prices and stoked worries about a greater risk of inflation and asset bubbles.

During the hearing, Yellen was pressed by Republicans to specify when the central bank might begin scaling back its $85 billion-per-month in bond purchases.

Yellen didn't bite. She said Fed policymakers assess the risks and benefits of the bond purchase program each time they meet.

"The committee is looking for ... signs of growth that are strong enough to promote continued progress" in the labor market. She said "there is no set time that we will decide to reduce the pace of our purchases."

Various Republicans expressed their concerns that the Fed's massive bond purchases, which have pushed the central bank's balance sheet to a record level of $3.8 trillion, have inflated stock prices and real estate.

"I think the economy has gotten used to the sugar you have put out there and I just worry that we are on a sugar high. That is a very dangerous thing," said Sen. Mike Johanns, R-Neb.

Yellen sought to assure the committee that the Fed is aware of those potential threats. But she said the benefits of the program currently outweigh the risks.

She also noted that the economy is still performing far below its potential and inflation is running below the Fed's 2 percent target.

"If we want to get back to business as usual and a normal monetary policy, we need to do that by getting the economy back to normal and that is what I hope (the Fed's) policy will accomplish," Yellen said.

Many economists believe the Fed will keep the purchase level unchanged at its upcoming meeting in December. Many say the Fed may not begin to scale back the program until its March meeting. That would allow the Fed more time to see if the solid job gains reported in the past three months continue.

Yellen's remarks seemed to confirm those forecasts.

"This is a strong signal that the Fed is not going to reduce its support for the economy any time soon," said Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University.
© Copyright 2016 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
S&P 500 index has its best year since 1997
The stock market closed out a record year with more all-time highs on Tuesday, giving U.S. indexes their biggest annual gains in almost two decades.
6:56PM ( 2 years ago )
Colorado readies for 'Green Wednesday' pot sales
Police were adding extra patrols around pot shops in eight Colorado towns that plan to allow recreational sales to anyone over 21 on Jan. 1.
1:52PM ( 2 years ago )
Kerry seeks framework for Mideast peace talks
A senior State Department official says Secretary of State John Kerry will try this week to get Israel and the Palestinians to agree on a framework for negotiating a final peace agreement, yet cautions against raising expectations for Kerry's latest round of shuttle diplomacy.
1:35PM ( 2 years ago )
U.S. News
Missing Ga. bank director arrested in Brunswick
A bank director accused of losing millions of investors' dollars before vanishing last year was arrested Tuesday during a traffic stop in a city in south Georgia.
7:00PM ( 2 years ago )
Amtrak to suspend some Crescent service in Jan., Feb.
Amtrak service will shut down in parts of the Southeast for several days in January and February for rail maintenance by Norfolk Southern Railway.
9:00AM ( 2 years ago )
Lung cancer scans urged for some smokers, not all
Certain current or former heavy smokers should start getting yearly scans for lung cancer to cut their risk of death from the nation's top cancer killer, government advisers said Monday - even as they stressed that the tests aren't for everyone.
7:26AM ( 2 years ago )
Business News
Sex offender held in Hall County for failing to register
A 47-year-old man was booked into the Hall County Jail Tuesday, being held without bond for allegedly failing to register as a sex offender, his second such arrest.
6:09PM ( 2 years ago )
Pharmacy robberies may involve same suspect
Oakwood Police Tuesday afternoon released details in a pharmacy robbery they're investigating, similar to one that happened in the Hall County Tuesday morning.
5:46PM ( 2 years ago )
Victim critical following apartment fire
A 41-year-old woman was in critical but stable condition Tuesday after being rescued from an apartment fire in Forsyth County late Monday afternoon.
3:16PM ( 2 years ago )
Local/State News
Feeling US snub, Saudis strengthen ties elsewhere
Increasingly vocal in its frustration over U.S. policies in the Mideast, Saudi Arabia is strengthening ties elsewhere, seeking out an alignment that will bolster its position after it was pushed to the sidelines this year.
4:34PM ( 2 years ago )
NSA reportedly intercepts computer deliveries
A German magazine has lifted the lid on the operations of the National Security Agency's hacker unit, revealing how American spies intercepted computer deliveries, exploited hardware vulnerabilities, and even hijacked Microsoft's bug report system to spy on their targets.
12:31PM ( 2 years ago )
Rockets fired from Lebanon into Israel
Rockets from Lebanon struck northern Israel on Sunday, causing no injuries but sparking an Israeli reprisal shelling in a rare flare-up between the two countries.
12:26PM ( 2 years ago )
Politics
Search for Missouri couple wanted for crimes across the South, including Ga., ends with one suspect dead and the other wounded
A weeklong search for a Missouri couple wanted in a series of robberies and abductions across the South ended with one suspect dead and the other wounded Friday, after authorities say they chased the pair across the highway and through a rural neighborhood and exchanged gunfire with them in Florida's Panhandle.
By The Associated Press
9:57PM ( 8 minutes ago )
Cheap oil will be sticking around for a while, buoying consumers, frustrating oil producers
Cheap oil will be sticking around for a while.That reality is wreaking havoc and causing uncertainty for some governments and businesses, while creating financial windfalls for others. Less expensive...
6:18PM ( 3 days ago )
Cruz (R) expected to claim conservative Iowa caucus victory, with Clinton (D) and Sanders (D) deadlocked among liberal vote
Texas Sen. Ted Cruz swept to victory in Iowa's Republican caucuses Monday, overcoming billionaire Donald Trump and Florida Sen. Marco Rubio. Among Democrats, Hillary Clinton and Bernie Sanders were deadlocked in a tight race.
By The Associated Press
10:55PM ( 3 days ago )
America, its politics in flux as voting begins
On the eve of the first contest on the 2016 presidential election calendar, some voters are pushing for bolder, more uncompromising action, with an intensity that has shaken both the Republican and Democratic establishments.
By The Associated Press
9:00PM ( 5 days ago )
Piedmont College biology professor says getting rid of mosquito breeding areas key to control of Zika virus
The World Health Organization says the Zika virus is likely to spread to every area of the U.S. where the mosquito that carries it can be found - and that includes Georgia.
By Russell Brown
9:38AM ( 5 days ago )