Janet Yellen: Federal Reserve likely to keep 'tapering'
Wednesday 12 February 2014
Janet Yellen, the new head of the Federal Reserve, said yesterday that while the recovery in the US employment market is "far from complete", the US central bank is likely to continue reducing or "tapering" its monthly bond-buying stimulus programme at a "measured" pace.
Ms Yellen, who faced a grilling from the House Financial Services Committee as she unveiled her first Monetary Policy Report, also indicated the Fed is likely to keep interest rates at near zero well past the point when unemployment falls below a previous threshold of 6.5 per cent.
Although January's US unemployment rate was 6.6 per cent, Ms Yellen stressed that the labour market's recovery "is far from complete".
She said those out of a job for more than six months continue to make up an unusually large fraction of the unemployed, and that the number of Americans working part time who would prefer a full-time job remains too high.
Crucially, she added: "These observations underscore the importance of considering more than the unemployment rate when evaluating the condition of the US labour market."
Some analysts saw this as a slight change in the Fed's criteria for returning interest rates to a higher level.
Under Ms Yellen's predecessor, Ben Bernanke, the Fed bought trillions of dollars worth of Treasury and mortgage bonds to help keep interest rates extraordinarily low and boost investment and markets following the recession of 2007-2009.
Following some improvements in the economy and employment, the Fed has reduced its purchases of treasury and mortgage bonds by $10bn (£6bn) a month in each of the last two months and currently buys at a monthly rate of $65bn.
Ms Yellen said: "If incoming information broadly supports the Federal Open Market Committee 's expectation of ongoing improvement in labour-market conditions and inflation moving back toward its longer-run objective, the committee will likely reduce the pace of asset purchases in further measured steps at future meetings.
"That said, purchases are not on a preset course, and the committee's decisions about their pace will remain contingent on its outlook for the labour market and inflation as well as its assessment of the likely efficacy and costs of such purchases."
As for how long interest rates will stay near zero, she said: "It likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6.5 per cent."
- 1 Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
- 2 Christians: The world's most persecuted people
- 3 The secret report that helps Israelis to hide facts
- 4 Danish TV reporter is all business up top, all party down below
- 5 Denmark bans kosher and halal slaughter as minister says ‘animal rights come before religion’
Woman and two children killed by mob in riots over 'blasphemous' Facebook post in Pakistan
Israel-Gaza conflict: The children were playing in the street with toy guns. The missiles were tragically real
Danish TV reporter is all business up top, all party down below
Syria conflict: Syrian and Turkish Kurds unite to battle Isis threat - ‘We shoot them like sheep, but next day double the number return’
Ross Burden dead: MasterChef and Ready Steady Cook star, dies aged 45
The secret report that helps Israelis to hide facts
A day in the life of Vladimir Putin: The dictator in his labyrinth
A new Russian revolution: The cracks are starting to appear in Putin’s Kremlin power bloc
Were 'Poor Doors' added to mixed developments so wealthy residents don't have to go in alongside social housing tenants?
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Opponents of Israel's military operation in Gaza are the real enemies of Middle Eastern peace
iJobs Money & Business
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£350 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...
£500 - £560 per day: Orgtel: Java Developer FX - Banking - London - Up to £560...
£350 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...
£26000 - £30000 per annum + Benefits: Ashdown Group: Account Manager - (Produc...