Fed’s Bernanke Anticipates Yellen Will Prioritize Strong Recovery Efforts

Janet Yellen’s Potential Impact on Federal Reserve Policy

Current Federal Reserve Chairman Ben Bernanke expressed confidence in Janet Yellen’s capability to drive a "more robust recovery" if she is confirmed as the next chief. Speaking at the National Economists Club annual dinner, Bernanke emphasized that the Federal Open Market Committee (FOMC) unanimously agrees that monthly bond purchases of $85 billion have significantly contributed to economic recovery.

He noted that even as tapering begins, interest rates are expected to remain near zero for an extended period, likely beyond the time when the unemployment rate meets the FOMC’s 6.5% threshold.

"The target for the federal funds rate is likely to stay close to zero for a considerable time after the asset purchases conclude, possibly well past the unemployment threshold, and at least until economic data indicates strong support for beginning to unwind policy accommodation," Bernanke stated. He highlighted the importance of economic data in determining the pace of tapering bond purchases.

"If these perspectives are validated by incoming information, the FOMC will probably start to reduce the pace of its purchases," he added.