“Let me emphasize that I expect a great deal of continuity in the Federal Open Market Committee’s approach to monetary policy,” Yellen said in remarks prepared for a hearing of the House Financial Services Committee.
“I served on the Federal Open Market Committee as we formulated our current policy strategy and I strongly support that strategy,” Yellen said.
Indeed, Yellen’s prepared remarks closely tracked the language of the Fed’s last policy statement. She said that the central bank would taper the pace of its asset purchases at future meetings if the economy continued to improve as expected, although the pullback was not on a preset course. The Fed’s decisions about the pace of tapering are data dependent, she added.
She added the Fed plans to hold short-term interest rates at zero “well past” the time the jobless rate falls below 6.5%.
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Economists widely expect the Fed to continue to taper its asset purchase program at its next meeting in mid-March. The Fed has already cut its bond-purchases by $10 billion in December and $10 billion in January and is now buying $65 billion of assets each month
Yellen made one bit of news, saying that volatility in global markets was not causing the Fed to rethink its policy stance.
“Our sense is that at this stage these developments do not pose a substantial risk to the U.S. economic outlook,” Yellen said.
The new Fed chairwoman did not address the two recent disappointing job reports. She said the Fed expects the economy and employment will expand at a “moderate pace” in 2014 and that inflation will move back toward the Fed’s 2% target.