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Fed Nominee Gives Views on Rates (click here)
By KEITH BRADSHER
Published: July 23, 1994
Janet L. Yellen, President Clinton's nominee to the Federal Reserve Board, dispelled some of the mystery surrounding her views on interest-rate policy today but did not take a clear position on whether she would support further increases in interest rates this year.
Published: July 23, 1994
Janet L. Yellen, President Clinton's nominee to the Federal Reserve Board, dispelled some of the mystery surrounding her views on interest-rate policy today but did not take a clear position on whether she would support further increases in interest rates this year.
The views that Ms. Yellen sketched out at her confirmation hearing before the Senate Banking Committee today suggested that she might be slightly less willing than her future colleagues to raise rates to curb inflation, but would still fall within the mainstream at the central bank.
If confirmed by the full Senate, as seems likely soon, Ms. Yellen would become President Clinton's second appointee on the seven-member Federal Reserve Board. Alan S. Blinder, a former member of the President's Council of Economic Advisers, joined the board last month. Campaign Consequences
Some Wall Street economists have speculated that the new nominees may be slightly more reluctant to raise interest rates and slightly more willing to tolerate inflation than the five Republican appointees. The Fed's decisions in the coming months will have a tremendous influence on the health of the American economy in 1996, when President Clinton is expected to seek re-election....
..."I agree with the Fed's decision to reduce monetary stimulus -- before the emergence of obvious inflationary pressure -- in order to avoid overshooting the natural rate" of economic growth, she said. "On the other hand, the appropriate amount of tightening involves some guesswork and it is difficult to know whether the actions that have been taken thus far will prove sufficient to prevent overheating, insufficient to the task at hand or possibly excessive."...
...The overall tone of Ms. Yellen's comments was not that different from Mr. Greenspan's. She contended that the Fed's target should be to keep the economy growing no faster than growth in the economy's underlying capacity to produce goods and services. And she warned against tolerating inflation so as to achieve short-term reductions in unemployment, saying that inflation would inflict long-run harm to the economy.
But Ms. Yellen, 47, startled some in the audience when she emphasized the needs of working people. "What the Fed should be pursuing is the economic welfare of working people, of all Americans," she said....
...She said she would pursue all of the targets laid out by Congress in a 1978 Democratic amendment to the Fed's charter -- "maximum employment, stable prices and moderate long-term interest rates."
