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April 17, 2014

Weak U.S. prices, not inflation, the threat now: Fed's Yellen

(Reuters) – “Persistently low inflation poses a more immediate threat to the U.S. economy than rising prices, Federal Reserve Chair Janet Yellen said on Wednesday, stressing that the U.S. central bank would be delivering policy stimulus for some time to come.”

“In her second public speech since taking the Fed’s helm, Yellen was careful not to predict when interest rates would rise from near zero. Instead, she stressed the decision would hinge on healing in the labor market and on how briskly inflation rises toward the Fed’s 2 percent goal.”

“Yellen’s relatively staid remarks to the Economic Club of New York intensified somewhat when Martin Feldstein, a Harvard University professor and former adviser to President Ronald Reagan, asked her whether she would let inflation creep above 2 percent to give the economy a bit more support.”

“With inflation running at around 1 percent, at this point I think the risk is greater that we should be worried about inflation undershooting our goal and getting inflation back up to 2 percent,” Yellen said.”

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Read full Reuters article here.

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