Fed Chair Promises Continuity Before Congress
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Janet Yellen made her first appearance on Capitol Hill today as the new leader of the Federal Reserve. Her message was clear - there will be no sudden changes in Fed policy. As NPR's John Ydstie reports, Yellen said the central bank is likely to keep pulling back its big stimulus program despite concerns about the economy.
JOHN YDSTIE, BYLINE: It was a long day for Janet Yellen. The House Financial Services Committee has 60 members and today, all of them wanted a chance to question the new Fed chair, the first woman ever to lead the Fed. Michigan Republican Bill Huizenga had a welcome and a warning for her.
REP. BILL HUIZENGA: Chair Yellen, congratulations on being confirmed as the first woman chair of the board of governors of Federal Reserve, and I think as you see with this group of cameras ahead of you, buckle up and hang on. This is going to be an interesting ride, I'm sure.
YDSTIE: Of course, interesting is a relative word when it comes to discussions of quantitative easing, forward guidance, capital requirements and accounting rules. Yellen brought her best central banker's game, providing patient and unflappable answers. She was congratulated by Colorado Democrat Ed Perlmutter for being just like her predecessor, Ben Bernanke.
REP. ED PERLMUTTER: You know, I really appreciated three things about him. One, he's very smart, very steady and not very exciting. And I want to say, you're following in his footsteps.
JANET YELLEN: Thank you. Appreciate that.
YDSTIE: And there was no detectable change in policy as Yellen took the helm. She argued the Fed's controversial bond-buying stimulus program, known as quantitative easing, had been a success. Its goal, she said, was to help the economy by producing lower long-term interest rates. She pointed to a stronger housing market and brisk auto sales as evidence of its positive impact.
YELLEN: When spending and employment increase in those sectors, the availability of jobs increases, unemployment tends to come down, growth picks up.
YDSTIE: Yellen added that since the beginning of the program, the unemployment rate has fallen one and a half percent. More progress needs to be made on the jobs front, said Yellen. But she didn't waver from the Fed's current course of dialing back its stimulus. Given the disappointing job growth in December and January, Yellen was asked whether the Fed might consider a pause before further winding down its stimulus. She didn't rule that out but said it's important to be cautious in interpreting the recent jobs data.
YELLEN: There were weather factors. We've had unseasonably cold temperatures that may be affecting economic activity in the job market and elsewhere.
YDSTIE: Yellen said by the Fed's next meeting in March, policymakers will have more data and a clearer idea about whether growth has slowed so much that the Fed should pause. But she said it would take a significant deterioration in the outlook for the economy for the Fed to boost its stimulus once again. Throughout the long day, Yellen defended the Fed's policies but acknowledged the economy remains a work in progress.
YELLEN: There has been substantial job creation, so that I think we have made progress. Certainly, there is a significant way to go.
YDSTIE: The financial market seemed comfortable with Yellen's testimony and the transition at the Fed. The major stock indexes all rose more than one percent. John Ydstie, NPR News, Washington.
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