Janet Yellen said Thursday that the economy was “significantly stronger” than it was at the beginning of the recession, but that it still needs federal stimulus to continue its improvement.
Speaking before the Senate banking committee Thursday, Yellen said that while the turnaround in the housing and auto industries bode well for the economy, still-high jobless rates indicate “a labor market and economy performing far short of their potential.”
Yellen indicated that if she were confirmed to succeed Ben Bernanke as Federal Reserve chair, she would continue her predecessor’s policy of quantitative easing (QE), an $85-bn-per-month bond-buying program meant to stimulate growth, the Washington Post reported.
“I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy,” she said.
That’s good news for the mortgage industry, which has seen historically low rates under Bernanke’s easy-money policies. But some Republican senators worried about the Fed’s expanded role since the recession, according to the Post.
“Just as some worried that we did not have enough regulations on the books to prevent the economic crisis, some of us worry that the post-crisis response will result in a regulatory regime that stifles growth and job creation,” said Sen. Mike Crapo (R-Idaho).
But Yellen insisted that QE was still necessary for the time being and refused to be held by lawmakers to a date for winding the program down.
“There is no set time when we will decide whether to reduce the pace of our purchases,” she said.
Although some Republicans have threatened to block Yellen’s nomination when it reaches the Senate floor, most observers think it unlikely to be derailed, the Post reported.