|By Joseph Lawler; Joseph Lawler, Economic Correspondent|
With the rest of
1. Yellen played the part.
She appeared comfortable and confident handling questions from the committee's senators, including hostile ones from Republicans skeptical of the Fed's monetary stimulus programs and from Democrats pushing her on regulatory issues. She had to prove that she could handle such a situation without making any major misstatements that could cause confusion about the Fed's plans, and she appeared to do so.
2. She avoided any major missteps.
Several senators tried to get Yellen to hint at the Fed's plans for "tapering" its
3. Senators are worried about asset bubbles, but Yellen isn't, at least for now.
Based on traditional methods of valuating assets, Yellen said, stocks are not "in territory that suggest bubble-like conditions."
Nevertheless, she acknowledged that the risk of bubbles forming is real, and will factor into her decision making. She said that the Fed has a "variety of tools" with which to address any run-up in asset prices that could threaten the financial system — and those include tightening money. "I would not rule out monetary policy as a tool to address asset price misalignments," she told
4. Yellen explained how she thinks quantitative easing works.
Yellen said she believes that quantitative easing stimulates the economy by lowering long-term interest rates. There are a number of different mechanisms through which quantitative easing could aid the economic recovery.
Yellen settled on one specific way: "The purpose of these purchases was to push down long-term interest rates," thereby helping consumers buy houses and cars, boosting those markets, she said. That underscores that she shares current Chairman
The majority of questions the
"If the regulators had done their jobs and reined in the banks" during the financial crisis, Warren suggested, "we wouldn't be talking about 'QE,' because we would have avoided the crisis altogether."
|Copyright:||(c) 2013 ProQuest Information and Learning Company; All Rights Reserved.|