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Federal Reserve nominee Yellen defends stimulus


Federal Reserve nominee Yellen defends stimulus


Janet Yellen, the White House nominee to take over at the Federal Reserve stressed there is “no set time” for the central bank to reduce its stimulus when she was quizzed by members of the US Senate as part of her confirmation process.

She said it could not continue forever, and acknowledged there are risks, but said any decision to reduce quantitative easing would be driven by what happens to the US economy in the future.

She said: “It is important not to remove support while the recovery is still fragile.”

In prepared remarks, Yellen told the Senate Banking Committee: “I consider it imperative that we do what we can to promote a very strong recovery. We are doing that by continuing our asset purchase programme, which we put in place with the goal of assuring a substantial improvement in the outlook for the labour market.”

She added: “The message that we want to send is that we will do what is in our power to assure a robust recovery, in the context of price stability.”

Yellen said the Fed’s policymakers look for “signs of growth” every time they meet.

Many economists believe they will keep purchasing assets – that is bonds – thereby pumping money into the US economy until next March.

That would given them more time to see if the solid job gains seen in the past three months continue as part of a durable economic recovery.

Unlike some Republican lawmakers, Yellen does not believe the current stimulus risks stoking inflation.

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