Recovery is not Satisfying for federal Reserve Chair Janet Yellen

Recovery is not Satisfying for federal Reserve Chair Janet Yellen

Federal Reserve Chair Janet Yellen said the recovery in the US has not been satisfying for her and the labor market will take more time to recover fully. Yellen said on Friday in a speech at the Kansas City Fed's annual conference in Jackson, Wyo, that there is no doubt that more Americans are getting jobs, but it is more important to figure out the potential of the economy to attain its maximum employment goal.

The July Federal Open Market Committee meeting made officials more aware about labor markets that are returning to health. She said a wide range of indicators have to be considered by policymakers to make that assessment. Yellen also emphasized the need for having flexibility in case of better the expected growth. If the country fails to achieve the Fed's goals of full employment and stable prices, then policy would be required to be more accommodating.

The assessment given by her is more balanced than any given in recent quarters, said Michael Gapen, senior U. S. economist at Barclays Capital Inc. and a former member of the Fed Board staff.

Gapen said it would become more difficult to give guidance on the interest rates as the committee gets closer to full employment.

Yellen agreed with the need of living up to the challenge, saying officials have devised ways to provide clear description of the policy framework being used. It was predicted by policymakers in June that the benchmark interest rate would rise next year. The rate has been kept close to zero since December 2008.

"Janet Yellen is maintaining as much space for herself for policy flexibility as she possibly can. She's underlining how complex this is", said Nicholas Colas, chief market strategist at the investment firm ConvergEx.

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