60° Good Morning
60° Good Morning

Yellen: Fed monitoring recent 'soft' economic data

Janet Yellen, chairwoman of the U.S. Federal Reserve,

Janet Yellen, chairwoman of the U.S. Federal Reserve, on Feb. 27, 2014, during a Senate Banking Committee hearing in Washington, D.C. Credit: Bloomberg News / Andrew Harrer

Federal Reserve Chair Janet Yellen said Thursday that the Fed will be watching to see whether the recent slowdown in consumer spending and job growth proves only a temporary blip caused by severe winter weather.

Yellen's comments to the Senate Banking Committee gave encouragement to Wall Street. Investors read the remarks as offering at least a hint that the Fed might slow or suspend a pullback in its economic stimulus if the economy faltered.

"We have seen quite a bit of soft data over the last month or six weeks," Yellen said, citing job growth, housing, retail sales and industrial production.

She said the Fed needs to "get a firmer handle on exactly how much of that set of soft data can be explained by weather and what portion, if any, is due to a softer outlook."

In her remarks, Yellen repeated the Fed's previous assurances that its pullback in its bond purchases is "not on a preset course" and could be modified if there was a "significant change" in the Fed's outlook. The Fed is gradually reducing its monthly bond purchases, which have been intended to keep long-term loan rates low to encourage spending and growth.

Yellen said that while she was open to adjusting the pace of the Fed's reductions in bond purchases, "I wouldn't want to jump to conclusions" that such a change will be needed.

In prepared testimony she gave two weeks ago to a House committee and on Thursday to the Senate panel, Yellen said the job market's recovery is "far from complete" and that she expects Fed policies to favor low interest rates "for quite some time."

Most economists say they expect the Fed to stick to its plan for steady reductions in bond purchases unless the economy significantly weakens in coming months.

Yellen's appearance Thursday completed her first twice-a-year report to Congress since becoming Fed chair this month. Her Senate appearance had been postponed by a snowstorm that shut federal offices in Washington on Feb. 13.

Yellen sought to emphasize policy continuity with her predecessor, Ben Bernanke, who stepped down last month. Yellen said that she, like Bernanke, believes the economy is strengthening enough for the Fed to gradually scale back its bond purchases.


We're revamping our Comments section. Learn more and share your input.

More news