Janet Yellen said on Thursday that the U.S. economy had regained ground lost to Great Recession, but still needed the Federal Reserve’s support because unemployment remains too high at 7.3 per cent.
Ms. Yellen made those comments in testimony to the Senate Banking Committee, which is considering her nomination to be the next chairman of the Federal Reserve.
The Fed’s support of the recovery was the “surest path to returning to a more normal approach to monetary policy,” said Ms. Yellen.
She noted that the U.S. economy is still performing far below its potential. And she points out that inflation is running below the Fed’s 2 per cent target. The Fed’s policies, which include three rounds of bond purchases, are credited with helping boost economic growth and lower unemployment. But they have also driven up stock prices and stoked worries about a greater risk of inflation and asset bubbles.
Some economists saw Mr. Yellen’s comments, which were released a day ahead of the hearing, as a sign that the Fed won’t move at its next meeting in December to reduce its bond purchases, a process often called ‘tapering’. Rather, the Fed could delay any tapering beyond March, when many have predicted it would begin.