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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.

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.

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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.”

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.

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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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Andrew Cuomo threatens to bail on CNN interview when his brother shows vintage photo of governor in bellbottoms

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Gov. Andrew Cuomo (D-NY) appeared to feign anger during a CNN interview Wednesday in which his brother, Christopher Cuomo, showed a vintage photo of their family with the elder brother clad in bellbottoms, a rhinestone belt and an unfortunate attempt at an afro.

The younger Cuomo is still suffering from the effects of coronavirus, appearing redfaced and wiping his brow. However, his brother noted that he seemed more animated than he has in days.

"Now I've seen you referred to a little bit recently as the 'Love Gov' and I'm wondering if that's making you a little soft on the president, that you don't want to really criticize him, because you need him and now's not a time for fighting," said the younger Cuomo. "But don't you have to balance that with calling him out if he's doing things that you don't think are great for the people of your state to be hearing and experiencing? Love Gov?"

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Fox News hosts are going back to downplaying threat from coronavirus: report

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Major Fox News personalities like Sean Hannity spent weeks assuring viewers that the novel coronavirus wasn't a serious threat. In recent weeks, however, they have shifted to a different narrative, acknowledging that the virus is dangerous but giving President Donald Trump credit for taking action and criticizing Democrats' lack of action — even though many Democrats, in fact, warned the pubic first.

But according to The Daily Beast, even as there is no clear end to the crisis in sight, and even as the U.S. crosses 13,000 deaths, many Fox News hosts are going back to downplaying the virus, either telling viewers it wasn't as bad as advertised and urging the president to end public safety measures against it.

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The dangers of Trump TV: MSNBC host hammers Fox News as ‘genuine public health threat’ amid pandemic

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Tuesday night, Fox News decided that all anyone needed to do is to pump Americans with a Malaria drug and send them back to work to save President Donald Trump's economy.

Speaking Wednesday night, MSNBC host Chris Hayes bashed the conservative network for downplaying the seriousness of coronavirus, saying that they are "a genuine public health threat."

While Trump has advisers like Dr. Anthony Fauci, he also has the unofficial advisers he sees on Fox News.

They "are coalescing around the idea the whole thing is just overblown and we need to pump everyone full of the malaria drug and get them back to work. This is what you heard if you watch trump tv just last night," Hayes said. He then played clips illustrating exactly that, with hosts ranting and raving about the virus not being as serious as the flu.

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