 "Imperative to promote a strong recovery: Yellen")
Janet Yellen, the nominee for chairman of the Federal Reserve, said she was committed to promoting a strong economic recovery and would ensure monetary stimulus wasn't removed too soon.
"I consider it imperative that we do what we can to promote a very strong recovery," she said in response to a question during testimony on Thursday to the Senate Banking Committee in Washington. "It's important not to remove support, especially when the recovery is fragile and the tools available to monetary policy, should the economy falter, are limited given that short-term interest rates are at zero," she said.
Yellen's testimony comes at a critical moment for monetary policy. The Federal Open Market Committee she is poised to lead is considering whether to begin slowing its $85-billion monthly bond-purchase program, which is pushing the Fed's assets toward a record $4 trillion.
Treasury yields
Treasury 30-year bonds rose for a second day during her testimony. The 30-year yield dropped five basis points, or 0.05 percentage point, to 3.77 percent at 11.25 am in New York. The Standard & Poor's 500 Index rose 0.5 per cent to 1,790.31.
Yellen said the Fed's key interest rate would remain low even after it starts to pare back on bond purchases. "As that program gradually winds down, we've indicated that we expect to maintain a highly accommodative monetary policy for some time to come thereafter, and the message we want to send is we will do what is in our power to ensure a robust recovery," she said.
The Fed has held its main rate near zero since December 2008, and the FOMC pledges to keep it there as long as the unemployment rate remains above 6.5 per cent and the outlook for inflation doesn't rise above 2.5 per cent.
QE debate
Yellen, 67, publicly voiced her views for the first time in seven months on the unprecedented monetary stimulus that she's supported and that some lawmakers have used to justify voting against her. Yellen refrained from publicly engaging in the asset-purchase debate, while she was under consideration to succeed Chairman Ben S Bernanke, whose term expires January 31. Her last public address, on regulation, was delivered June 2. She has not given a speech on monetary policy since April 16.
The FOMC began $40 billion in monthly purchases of mortgage-backed securities in September 2012 and announced $45 billion in Treasury securities to that pace in December. Fed officials have said their $85 billion pace of purchases will continue until the labour market improves "substantially."
Some Fed officials have voiced concern that low rates are overheating prices for assets including farmland, which could heighten risks when they reverse their bond buying.
Asked on Thursday about stock prices, Yellen said she doesn't see "bubble-like conditions."
"I consider it imperative that we do what we can to promote a very strong recovery," she said in response to a question during testimony on Thursday to the Senate Banking Committee in Washington. "It's important not to remove support, especially when the recovery is fragile and the tools available to monetary policy, should the economy falter, are limited given that short-term interest rates are at zero," she said.
Yellen's testimony comes at a critical moment for monetary policy. The Federal Open Market Committee she is poised to lead is considering whether to begin slowing its $85-billion monthly bond-purchase program, which is pushing the Fed's assets toward a record $4 trillion.
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She said the central bank's asset purchases "have made a meaningful contribution to economic growth and improving the outlook" and that the program "will not continue indefinitely." She also emphasised her commitment to the Fed's two per cent inflation goal and strengthening financial regulation. "A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases," Yellen said earlier in her prepared remarks. "Supporting the recovery today is the surest path to returning to a more normal approach to monetary policy."
Treasury yields
Treasury 30-year bonds rose for a second day during her testimony. The 30-year yield dropped five basis points, or 0.05 percentage point, to 3.77 percent at 11.25 am in New York. The Standard & Poor's 500 Index rose 0.5 per cent to 1,790.31.
Yellen said the Fed's key interest rate would remain low even after it starts to pare back on bond purchases. "As that program gradually winds down, we've indicated that we expect to maintain a highly accommodative monetary policy for some time to come thereafter, and the message we want to send is we will do what is in our power to ensure a robust recovery," she said.
The Fed has held its main rate near zero since December 2008, and the FOMC pledges to keep it there as long as the unemployment rate remains above 6.5 per cent and the outlook for inflation doesn't rise above 2.5 per cent.
QE debate
Yellen, 67, publicly voiced her views for the first time in seven months on the unprecedented monetary stimulus that she's supported and that some lawmakers have used to justify voting against her. Yellen refrained from publicly engaging in the asset-purchase debate, while she was under consideration to succeed Chairman Ben S Bernanke, whose term expires January 31. Her last public address, on regulation, was delivered June 2. She has not given a speech on monetary policy since April 16.
The FOMC began $40 billion in monthly purchases of mortgage-backed securities in September 2012 and announced $45 billion in Treasury securities to that pace in December. Fed officials have said their $85 billion pace of purchases will continue until the labour market improves "substantially."
Some Fed officials have voiced concern that low rates are overheating prices for assets including farmland, which could heighten risks when they reverse their bond buying.
Asked on Thursday about stock prices, Yellen said she doesn't see "bubble-like conditions."