Yellen: Job market needs low rates 'for some time'

Federal Reserve Chair Janet Yellen made clear Monday that she thinks the still-subpar U.S. job market will continue to need the help of low interest rates "for some time."

Yellen's remarks signaled that even after the Fed phases out its monthly bond purchases later this year, it has no plans to raise a key short-term rate anytime soon. The bond purchases have been intended to keep long-term loan rates low.

Her remarks sent a reassuring message to investors, many of whom had grown anxious that the Fed might raise short-term rates by mid-2015. Their concerns were stirred two weeks ago, when Yellen suggested that the Fed could start raising short-term rates six months after it halts its bond purchases, which most economists expect by year's end.

A short-term rate increase would elevate borrowing costs and could hurt stock prices.

But Monday Yellen indicated that the Fed still thinks rates should remain low to stimulate borrowing, spending and economic growth.

"I think this extraordinary commitment is still needed and will be for some time, and I believe that view is widely held by my fellow policymakers at the Fed," Yellen said in her first major speech since taking over the Fed's leadership in February.

Yellen, in remarks to a national conference on community reinvestment in Chicago, described the U.S. job market as less than healthy despite steady gains since the recession ended nearly five years ago. She said the difficulty many people are still having finding full-time work shows low rates are still needed to encourage borrowing and spending.

Economists said they viewed Yellen's comments as a message that even though the Fed is trimming its bond purchases, it's nowhere near moving to raise its benchmark short-term rate, which has been at a record low near zero since December 2008.

In an unusual touch for a speech by a Fed chief, Yellen described the personal stories of three people who had lost their jobs during the recession and struggled to find work.

"They are a reminder that there are real people behind the statistics," Yellen said. She noted the struggles of a medical claims processor, a printing plant worker and a construction worker who lost their jobs during the Great Recession.

"The past six years have been difficult for many Americans, but the hardships faced by some have shattered lives and families," she said.

Yellen said that while the unemployment rate has fallen from a peak of 10 percent in October 2009 to 6.7 percent in February, by many measures the job market remains weak. She said she and her Fed colleagues think a jobless rate between 5.2 percent and 5.6 percent would be "consistent with maximum sustainable employment."