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Federal Reserve chair says U.S. economic recovery is still incomplete

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By Howard Schneider and Michael Flaherty

WASHINGTON, (Reuters) – The U.S. economic recovery remains incomplete, with a still-ailing job market and stagnant wages justifying loose monetary policy for the foreseeable future, Federal Reserve Chair Janet Yellen told a Senate committee on Tuesday.

In a strong defense of the central bank’s current stance, Yellen said that early signs of a pickup in inflation aren’t enough for the Fed to accelerate its plans for raising interest rates, a move currently expected in the middle of next year.

That could change, with interest rates rising sooner and faster, if data show labor markets improving more quickly than expected, she said.

But as it stands, “although the economy continues to improve, the recovery is not yet complete,” Yellen said in semi-annual testimony before the Senate Banking Committee, repeating her focus on lagging labor force participation and weak wage growth as key to any conclusions about the economy’s health.

“Too many Americans remain unemployed,” Yellen said.

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Yellen presented a broad overview of an economy still in transition from the 2007-2009 economic crisis. In an accompanying report, the Fed said its balance sheet would top out at $4.5 trillion when its bond-buying program ends in October, a sign of how much stimulus the central bank has had to unleash to support the economy.

With another $2.6 trillion held in reserve by banks, the report said it “will not be feasible” for the Fed to rely on the traditional Fed Funds market to manage interest rates – a judgment implicit in its recent work on new interest rate tools.

In her remarks, Yellen said the economy continues to generate jobs and steady growth. But she said Fed policymakers currently expect their preferred measure of inflation to stand at between 1.5 percent and 1.75 percent for 2014, short of the central bank’s 2 percent target. The housing market remains weak, Yellen said, and business investment less than hoped.

Thriving equity and security markets have raised concerns of a possible bubble, but Yellen said that the values of stocks, bonds and other assets “remain generally in line with historic norms.”

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Fed chairs are mandated by law to report to Congress twice a year on monetary policy, and the hearing on Tuesday is Yellen’s second such appearance. Her first turned into a marathon grilling about her philosophy and views of the economy.

The Fed faces a complex agenda as it weans the U.S. economy from the massive stimulus programs put in place to fight the financial crisis.

Economic data has kept Fed policymakers relatively upbeat that the economy will make steady progress towards the central bank’s goals.

But there is also the potential for serious division.

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Some policymakers worry the Fed is falling behind the curve on rate hikes and that Yellen is taking too much of an impromptu approach to the interest rate decision. In her prepared testimony, she held firm to her view that low labor force participation and other labor market statistics are evidence of slack that needs to be absorbed by stronger job growth, not just a sign of unavoidable demographic change.

For now, a more dovish approach holds sway at the central bank, with several officials saying they’d tolerate inflation higher than the 2 percent target for a period of time in order to ensure growth is on track, wages are rising, and as many workers as possible have been drawn back into jobs.

(Reporting by Howard Schneider; Editing by Paul Simao)

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Trump accuses newspaper of ‘virtual act of treason’ for reporting on a story that made him look awful

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President Donald Trump attacked an American newspaper for reporting a story that made him look bad.

"Do you believe that the Failing New York Times just did a story stating that the United States is substantially increasing Cyber Attacks on Russia. (sic) This is a virtual act of Treason by a once great paper so desperate for a story, any story, even if bad for our Country ... also, not true," the commander-in-chief tweeted on Saturday evening.

"Anything goes with our corrupt news media today," Trump argued.

"They will do, or say, whatever it takes, with not even the slightest thought of consequence," he continued.

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Alt-Right headed to court — the ‘serious injuries’ inflicted on two sisters could cost white nationalists $10 million

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Some of the most prominent members of the Alt-Right are being sued by two sisters for $10 million.

Sisters Tadrint and Micah Washington filed a lawsuit after being seriously injured in the fatal Unite the Right rally in Charlottesville, the Daily Progress reported Saturday.

"The suit has since been narrowed to Fields, Kessler, Spencer, the National Policy Institute, William Regnery II, AltRight Corp., Mike Peinovich, Michael Hill, Matthew Heimbach, the Traditionalist Worker Party, the League of the South, Bradley Griffin, Vanguard America, Augustus Invictus, Chris Cantwell, Andrew Anglin, Moonbase Holdings, Identity Europa, Nathan Damigo and Elliott Kline," the newspaper reported.

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Man barricaded himself in Alexandria Ocasio-Cortez’s office in Queens

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The New York Police Department responded to a Saturday break-in at the Queens office of Rep. Alexandria Ocasio-Cortez by a 27-year-old man.

"The alleged trespasser barricaded himself in the 3rd floor office, hiding in a utility closet until police convinced him to come out," WPIX-TV reports.

"The man was taken to an area hospital for an evaluation. Charges against him are pending," ABC 7 reported.

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