Make us your home page
Instagram

Yellen: Fed monitoring recent weaker economic data

Federal Reserve Chair Janet Yellen testifies Thursday on Capitol Hill in Washington before the Senate Banking Committee to deliver a semiannual  report.

Associated Press

Federal Reserve Chair Janet Yellen testifies Thursday on Capitol Hill in Washington before the Senate Banking Committee to deliver a semiannual report.

WASHINGTON — Federal Reserve Chair Janet Yellen noted Thursday that recent economic data have pointed to weaker-than-expected gains in consumer spending and job growth. She said the Fed will be watching to see whether the slowdown proves only a temporary blip caused by severe winter weather.

"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 to the Senate Banking Committee, 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 steady reductions in bond purchases unless the economy significantly weakens in coming months.

"The market is hopeful that they can count on her not to be too aggressive in tapering bond purchases," said David Jones, chief economist at DMJ Advisors. "But in essence, she said she was not going to deviate from the policy course that has been set in terms of reductions in bond purchases."

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.

In both her House and Senate appearances, Yellen sought to emphasize policy continuity with her predecessor, Ben Bernanke, who stepped down last month after eight years as chairman. Yellen said that she, like Bernanke, believes the economy is strengthening enough for the Fed to gradually scale back its bond purchases.

The Fed has cut the pace of its purchases at both its most recent meetings. It reduced the original $85 billion monthly pace in December and again in January in $10 billion steps to a current level of $65 billion.

Many economists think that as long as the economy keeps improving, the Fed will keep cutting the bond purchases by $10 billion at each meeting this year until ending the program in December.

The Fed has stressed that it's standing by a plan to keep a key short-term rate at a record low near zero for an extended period.

At the past two meetings, it has said short-term rates will likely remain low "well past" the time unemployment drops below 6.5 percent. The unemployment rate is now 6.6 percent.

The Fed has held its benchmark for short-term rates near zero since December 2008.

Yellen: Fed monitoring recent weaker economic data 02/27/14 [Last modified: Thursday, February 27, 2014 7:59pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Shares in Tampa's Health Insurance Innovations rebound from stronger earnings report

    Corporate

    TAMPA — After a sharp drop in its stock price in August and September, Health Insurance Innovations on Monday announced strong revenue and net income gains in preliminary numbers for its third quarter of the year. The company also announced a $50 million stock buyback over the next two years meant to bolster its …

    After losing more than half its market value between August and September, shares in Tampa's Health Insurance Innovations are rebounding."The new share repurchase program underscores our confidence in our business strategy, financial performance, and the long-term prospects of our company while also allowing us the financial flexibility to continue to invest in our business," company CEO Gavin Southwell announced Monday. [Courtesy of LinkedIn]
  2. Trigaux: Campaign aims to leverage tourism ads to recruit millennials, businesses

    Economic Development

    TAMPA — Tampa Bay's unleashing one of its best weapons — a cadre of successful entrepreneurs and young business leaders — in a marketing campaign already under way but officially …

    Erin Meagher, founder of Tampa coconut oil products company Beneficial Blends, is part of a group of business savvy millennial entrepreneurs and managers who are helping to pitch the work-live-play merits of the Tampa Bay market in a new marketing campaign called Make It Tampa Bay. The campaign is backed by Visit Tampa Bay and the Tampa Hillsborough Economic Development Corp. and aimed at recruiting more millennial talent to relocate and stay in the Tampa Bay area. [Courtesy Tampa Hillsborough EDC, Visit Tampa Bay]
  3. Florida gas prices drop 25 cents on average over past month

    Autos

    Gas prices are on a downward tear post-hurricane. Tampa Bay fell to $2.34 per gallon on Sunday, down 10 cents over the week, according to AAA, The Auto Club Group. Across the state, gas fell 7 cents over the same period to average $2.47 per gallon.

    Gas prices across the state fell 25 cents over 31 days. | [Times file photo]
  4. Entrepreneur expands interests with Twisted Crafts

    Business

    SOUTH TAMPA — Playgrounds of Tampa owner Mike Addabbo is expanding into the do-it-yourself industry with his new endeavor: Twisted Crafts.

     Jennifer and Michael Addabbo pose in their latest entrepreneurial enterprise: Twisted Crafts. Photo courtesy of Twisted Craft.
  5. Amazing Lash franchise expands to South Tampa

    Business

    SOUTH TAMPA — Jeff Tolrud opened the doors to his third Amazing Lash Studio franchise earlier this month, this time in South Tampa.

    When customers walk in, the studios have the same look and feel throughout the country, operator Jeff Tolrud said of Amazing Lash Studio. Tolrud opened his third in Hillsborough County earlier this month. Photo courtesy of Amazing Lash.