|Craig Torres and Aki Ito|
Yellen, testifying to the
“It seemed like it was a long, hard decision to start tapering, and I think they’re loath to stop it unless they have a good reason,” said
Stocks rallied as Yellen predicted moderate growth and declining unemployment. The 67-year-old chairman, who emphasized continuity with the policies she helped craft as deputy to her predecessor,
The Fed last month announced its second consecutive
Yellen yesterday repeated the Fed’s plan to scale back stimulus in “measured steps” and said that only a “notable change in the outlook” for the economy would prompt a change of course. She also said “it’s important for us to take our time to assess” the significance of recent reports showing payrolls expanded less than projected.
“She doesn’t want to rock the boat,” said
In a hearing that lasted for more than five hours, Yellen broke with precedent by answering every question, prompting
Yellen was pressed for her views on issues ranging from financial regulation and the budget deficit to coal prices and income inequality. She took care to avoid wading into partisan debates on subjects like the impact of the Affordable Care Act on the labor market.
The Standard & Poor’s 500 Index climbed 1.1% to 1,819.75 at the close of trading yesterday in
On the path of the federal funds rate, Yellen also stayed close to the Federal Open Market Committee’s recent statements. Fed officials have said they wouldn’t consider raising the benchmark lending rate so long as unemployment stays above 6.5% and the outlook for inflation is no more than 2.5%.
A wave of retiring baby boomers has reduced participation in the labor force faster than many economists forecast, resulting in lower unemployment rates. In December, the committee hedged its labor-market threshold, saying that the benchmark lending rate is likely to remain around zero “well past the time that the unemployment rate declines below 6.5%.”
Unemployment fell to 6.6% in January, the lowest level since
Yellen took a first step yesterday, saying in her written remarks that the “recovery in the labor market is far from complete.”
“Those out of a job for more than six months continue to make up an unusually large fraction of the unemployed, and the number of people who are working part time but would prefer a full-time job remains very high,” she said in her written remarks. “These observations underscore the importance of considering more than the unemployment rate when evaluating the condition of the U.S. labor market.”
Yellen’s high bar both for altering the pace of tapering bond purchases and for raising the benchmark lending rate puts her in line with the center of the policy committee’s outlook. In December, 12 of the 17 policy makers who participated in the meeting didn’t see the first interest-rate increase until 2015.
“She is going to govern from the middle,” as chairman, said
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