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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.

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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.

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.

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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.

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But there is also the potential for serious division.

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.

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(Reporting by Howard Schneider; Editing by Paul Simao)


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Trump rages against impeachment ‘lynching’ — and warns GOP will seek revenge against next Dem president

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President Donald Trump declared himself a victim of a "lynching" -- and threatened the next Democratic president with impeachment as he faces increasing calls for his removal from office.

The president raged against the impeachment inquiry that has largely been held in closed-door hearings as House Democrats investigate a possible criminal conspiracy involving classified information.

"So some day, if a Democrat becomes President and the Republicans win the House, even by a tiny margin, they can impeach the President, without due process or fairness or any legal rights," Trump tweeted. "All Republicans must remember what they are witnessing here - a lynching. But we will WIN!"

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Global millionaires now own nearly half of world’s $361 trillion in wealth

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The millionaires of the world, who account for just 0.9 percent of the global population, now own nearly half of the planet's $361 trillion in wealth while the bottom 56 percent of the population owns just 1.8 percent.

That's according to the annual Global Wealth Report released Monday by Credit Suisse, which found that the number of millionaires in the world grew to 47 million between mid-2018 and mid-2019, with the United States leading the world in both new and total millionaires.

According to Credit Suisse, the U.S. added 675,000 new millionaires over the past year, bringing the country's total to 18.6 million.

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Jimmy Carter suffers pelvis fracture in another fall at home

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Former President Jimmy Carter suffered an injury in a fall at home.

Carter, who turned 95 years old this month, fell Monday evening at his home in Plains, Georgia, and was hospitalized for treatment of a minor pelvic fracture, according to The Carter Center.

Former U.S. President Jimmy Carter had a fall yesterday evening at his home in Plains, Ga. He has been admitted to Phoebe Sumter Medical Center for observation and treatment of a minor pelvic fracture. He is in good spirits and is looking forward to recovering at home.

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