海角大神

Federal Reserve chiefs may sometimes speak in code, but Janet Yellen, facing Congress for the first time in that role, was pretty clear: She doesn鈥檛 see the Fed backing off its 鈥渢aper鈥� of bond purchases, but she also thinks it鈥檚 too soon to think about raising interest rates.

And the stock market was pretty transparent, too: It had no problem with that message.

The Standard & Poor鈥檚 500 index finished up about 1 percent for the day after she spoke to the House Financial Services Committee. The S&P rose on other matters too 鈥� notably signs that Congress will be able to take a timely vote to raise its cap on federal debt 鈥� but Chair Yellen鈥檚 testimony didn鈥檛 roil the markets.

Her overall message was to affirm the Fed鈥檚 current policies, and to defend them as the right course in an economy that鈥檚 improving but far from fully recovered.

She said the Fed expects the economy to grow 鈥渁t a moderate pace this year and next,鈥� that 鈥渢oo many Americans remain unemployed,鈥� and that 鈥淚 expect a great deal of continuity in [Fed] monetary policy.鈥�

Her task wasn鈥檛 easy, and not just because this was her first time in the hot seat as Fed Chair, answering a battery of questions from lawmakers. She faced pressure from the political right and left, with some criticizing the Fed鈥檚 low-interest-rate policies and others urging her to consider greater stimulus for job creation.

The hearing also came amid some uncertainty for the economy, with many forecasters anticipating solid growth ahead but with the latest Labor Department survey showing that just 113,000 jobs had been created in January.

The meeting became lively at the outset, as Rep. Jeb Hensarling (R) of Texas framed a question this way:

鈥淎re you a sensible central banker, and if not, when will you become one?鈥�

Behind his query was a statement she had made at a 1995 Fed meeting, saying that using rules or formulas for monetary policy is 鈥渨hat sensible central banks do.鈥� Hensarling is a proponent of such a rules-based approach to the work of central bankers, which can have wide impacts on the economy for better or worse.

Yellen鈥檚 response was essentially 鈥測es鈥� (she thinks she鈥檚 a sensible central banker) but that these are extraordinary times.

For example, in order to follow what鈥檚 commonly known as a 鈥淭aylor rule鈥� for setting the Fed鈥檚 short-term interest rate, she said, the Fed would have to make the interest rate negative, 鈥渨hich is impossible.鈥�

鈥淚 have always been in favor of a predictable monetary policy that responds in a systematic way鈥� to economic changes, Yellen added.

Where some Republicans blasted the Fed鈥檚 near-zero interest rate for imposing hardship on American retirees who can鈥檛 earn a decent return on their life savings, some Democrats said the Fed should be doing more 鈥� not less 鈥� in efforts to stimulate job growth.

She expressed sympathy for the thought behind both questions, but gave no cause to expect dramatic shifts in Fed policy.

As hard as low interest rates are on savers, she said, the best way eventually to normalize those rates is to get the economy growing faster. Trying to raise rates too soon could prolong that process.

For more than a year, the Fed鈥檚 policy committee has said it wouldn鈥檛 consider a hike in the short-term interest rate until unemployment dipped to 6.5 percent, as long as inflation didn鈥檛 exceed 2 percent. Today, with the jobless rate already down to 6.6 percent, Fed officials including Yellen are saying the 6.5 percent rate is not a 鈥渢rigger鈥� for raising rates.

In practice, Yellen told lawmakers Tuesday, she鈥檒l be looking at a range of labor-market and inflation data to assess when to raise rates. It鈥檚 likely the Fed will maintain ultra-low interest rates 鈥渨ell past the time that the unemployment rate declines below 6-1/2 percent,鈥� she said in the written testimony prepared for Tuesday鈥檚 hearing.

Rep. David Scott (D) of Georgia decried the nation鈥檚 high unemployment rates for groups including young college grads, blacks, and military veterans. 鈥淭he future of this country is at stake,鈥� he said.

Yellen agreed on the challenge and sided with Representative Scott in voicing opposition to Republican-backed legislation to back away from 鈥渇ull employment鈥� as a congressionally mandated goal for Fed policy.

鈥淚 feel very strongly that the Fed鈥檚 dual mandate to focus on both full employment and price stability has served this country well,鈥� she said.

If the Fed might try any new efforts to stimulate job creation, Yellen didn鈥檛 give any hints of it in the hearing, however.

In fact, the central bank has begun to scale back the size of one monetary stimulus program 鈥� the monthly bond purchases designed to add downward pressure on long-term interest rates.

A 鈥渢aper鈥� policy means these purchases have downshifted from $85 billion per month in December to $65 billion after the Fed鈥檚 January meeting.

Yellen suggested that it would take significant deterioration in the outlook for economic growth, or serious concerns that inflation would be too low (below the target of 2 percent a year) to move the Fed off its course of reducing the bond purchases.

The US stock market hasn鈥檛 been fazed by the taper policy. And, as the Fed describes it, the bond purchases are still adding monetary stimulus 鈥� just at a cooler pace.

Overseas however, the taper has in effect tightened financial conditions, prompting a rise in interest rates in emerging-market nations.