Yellen: Fed has 'more work to do' to aid recovery
Janet Yellen, President Barack Obama's nominee to chair the Federal Reserve, said the U.S. central bank has "more work to do" to help an economy and labor market that are still underperforming.
"I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy," Yellen, the Fed's current vice chair, said in remarks prepared for delivery to the Senate Banking Committee on Thursday.
Yellen would be the first woman to lead the U.S. central bank if her nomination is confirmed by the Senate, as widely expected, although she will face heavy questioning from Republicans on the banking panel critical of the Fed's easy money stance.
In comments that appeared aimed at pre-empting some of that questioning, Yellen said the economy and labor market were performing "far short" of their potential, while price pressures remained muted.
"Inflation has been running below the Federal Reserve's goal of 2 percent and is expected to continue to do so for some time," she said, according to a copy of the testimony made available on Wednesday in advance of the hearing.
Stock and bond futures both edged higher and the dollar slipped against the euro after the news hit traders' screens, continuing a trend that began earlier on Wednesday on speculation her remarks would strike a dovish tone.
Members of the committee, who need to vet Yellen's nomination before sending it to the full Senate for final consideration, will quiz her on the central bank's aggressive monetary policy, including its controversial asset purchases.
She can anticipate tough questions, but even lawmakers critical of the Fed's policy stance expect her to win confirmation relatively easily.
Obama's Democrats control 55 of the chamber's 100 seats, which means the 67-year-old former economics professor need only win backing from five Republicans to reach the 60-vote threshold necessary to overcome Senate procedural hurdles.
The banking panel, which has 12 Democrats among its 22 members, will begin the hearing at 10 a.m. ET (1500 GMT) on Thursday.
The Fed has held interest rates near zero since late 2008 and has quadrupled its balance sheet to around $3.8 trillion through three massive bond buying campaigns aimed at holding down long-term borrowing costs to spur growth and hiring.
Critics claim this could stoke future inflation and financial instability if the policy drives investors into risky investments and leads to another asset bubble.
Reuters