Nov. 14 (UPI) -- Federal Reserve chair nominee Janet Yellen said Thursday during her nomination hearing that she would continue the government's bond-buyback policy until the economy is stronger.
While the unemployment rate fell from its high of 10 percent during the recession, it still is too high, Yellen said. The current rate is 7.3 percent. Jobless claims announced Thursday were weaker than expected, but Friday's jobs report was higher than expected. U.S. stocks rose Thursday in response to mixed economic news, anticipating Federal Reserve money holding the economy up.
Meanwhile, Yellen said interest rates will stay low, below the Fed's ultimate goal of 2 percent. The Federal Reserve's mandate is to improve the labor market and stabilize inflation rates. Investors and Senate Republicans were previously concerned that her heightened concern for unemployment would dilute her emphasis on inflation control.
Through the bond-buyback program, otherwise known as quantitative easing, the Federal Reserve's balance sheet is now nearly $4 trillion. Sen. Mike Crapo (R-Idaho) said he was concerned that this would amount to 24 percent of GDP in the first quarter of 2014.
"There are costs and risks associated with the program. we're monitoring those very carefully," Yellen said at the hearing. "The longer this problem continues, the more we will need to worry about those risks." There is no set date for the program to end.
This is the first time Yellen voiced her views on the bond buy-back, and it was a glimpse of how she would lead the Fed -- assertively. The White House appreciates this because beyond the Fed's initial mandate, it also plays a strong role in post-recession Wall Street reform.
When the nomination passes Congress, Yellen will be the first woman to chair the Federal Reserve. She currently serves on the Federal Reserve Board and was the first Fed official to indicate the housing bubble as a threat to the economy, and the first to announce the 2008 recession.