San Francisco Federal Reserve Bank president Janet Yellen said Thursday night that with the economy operating below its potential and inflation not threatening, it is “appropriate” for the Fed to continue its “accommodative” monetary policy.
Yellen, the presumed successor to Donald Kohn as Fed vice chairman in several months, said the Fed will need to make monetary policy less stimulative “at some point” as the expansion proceeds, but she now supports the Federal Open Market Committee’s assessment that the federal funds rate is likely to stay “exceptionally low ... for an extended period.”
The economy is improving, but the recovery remains “fragile,” she said in remarks prepared for delivery to Financial Executives International in San Francisco.
Yellen said she expects “muted” job gains that will leave the unemployment rate at 9.25% at the end of this year and 8% at the end of next year.
Meanwhile, inflation is not just low but “diminishing,” she said.
Against that backdrop, Yellen made clear she sees no need for the Fed to raise rates in the foreseeable future.
— Market News International
