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Fed
Chair Janet Yellen told senators it was hard to tell now how much the
weather was affecting growth. Getty Images. Travel Deals.
Yellen nods to cold weather, says unclear impact on economy
Fed Chair Janet Yellen told senators it was hard to tell now how much the weather was affecting growth. Getty Images
Federal Reserve
Chair Janet Yellen said Thursday that the central bank would be on alert
to make sure recent signs of weakness in the U.S. economy were due to
cold weather and storms, and not signals of a more fundamental slowdown.
"Since my appearance before the House committee, a number of data
releases have pointed to softer spending than many analysts have
expected," Yellen, who took the reins at the Fed on Feb. 1, told a
Senate Banking Committee hearing, referring to Feb. 11 testimony.
"Part of that softness may reflect adverse weather conditions, but at this point it's difficult to discern exactly how much," she added. "In the weeks and months ahead, my colleagues and I will be attentive to signals that indicate whether the recovery is progressing in line with our earlier expectations."
After more than five years of ultra accommodative policies in the wake of the recession, the Fed is taking the first steps to wind them down. It modestly trimmed a bond-buying program in each of the last two months and, according to forecasts, it plans to raise interest rates some time next year as long as the economy continues to improve.
While Yellen has made clear there is a high bar for the Fed to shelve
its plan to keep trimming the purchases, heavy snowstorms and cold snaps
have hit U.S. employment, retail sales, and manufacturing in recent
months.
The world's largest economy has added fewer than 200,000 jobs in the
last two months, well below expectations, prompting economists and
investors to speculate that the Fed might not cut the purchases by an
additional $10 billion at a policy-setting meeting March 18-19. "Part of that softness may reflect adverse weather conditions, but at this point it's difficult to discern exactly how much," she added. "In the weeks and months ahead, my colleagues and I will be attentive to signals that indicate whether the recovery is progressing in line with our earlier expectations."
After more than five years of ultra accommodative policies in the wake of the recession, the Fed is taking the first steps to wind them down. It modestly trimmed a bond-buying program in each of the last two months and, according to forecasts, it plans to raise interest rates some time next year as long as the economy continues to improve.
The bond-buying is now running at $65 billion a month.
On Thursday, Yellen reinforced that the Fed expects to continue drawing down the program and shelve the purchases some time in the fall. She repeated that the purchases were not on a preset course and that the Fed would reconsider its plan if there were a "significant change" to the economic outlook.
But first the Fed needs to get a "firmer handle" on whether the soft data are due to weather or some more fundamental slowdown, Yellen said.
Interest rates have been near zero since the worst of the financial crisis in late 2008; the Fed has meanwhile swollen its balance sheet to more than $4 trillion in a further attempt to stimulate investment, hiring, and growth in the United States.
The severe weather also depressed residential construction and industrial production in January and put a damper on home resales last month.
Read more at http://www.philly.com/philly/business/20140228_Yellen_nods_to_cold_weather__says_unclear_impact_on_economy.html#ADjVGd1sBtw4uttJ.99
Yellen nods to cold weather, says unclear impact on economy
Fed Chair Janet Yellen told senators it was hard to tell now how much the weather was affecting growth. Getty Images
Federal Reserve
Chair Janet Yellen said Thursday that the central bank would be on alert
to make sure recent signs of weakness in the U.S. economy were due to
cold weather and storms, and not signals of a more fundamental slowdown.
"Since my appearance before the House committee, a number of data
releases have pointed to softer spending than many analysts have
expected," Yellen, who took the reins at the Fed on Feb. 1, told a
Senate Banking Committee hearing, referring to Feb. 11 testimony.
"Part of that softness may reflect adverse weather conditions, but at this point it's difficult to discern exactly how much," she added. "In the weeks and months ahead, my colleagues and I will be attentive to signals that indicate whether the recovery is progressing in line with our earlier expectations."
After more than five years of ultra accommodative policies in the wake of the recession, the Fed is taking the first steps to wind them down. It modestly trimmed a bond-buying program in each of the last two months and, according to forecasts, it plans to raise interest rates some time next year as long as the economy continues to improve.
While Yellen has made clear there is a high bar for the Fed to shelve
its plan to keep trimming the purchases, heavy snowstorms and cold snaps
have hit U.S. employment, retail sales, and manufacturing in recent
months.
The world's largest economy has added fewer than 200,000 jobs in the
last two months, well below expectations, prompting economists and
investors to speculate that the Fed might not cut the purchases by an
additional $10 billion at a policy-setting meeting March 18-19. "Part of that softness may reflect adverse weather conditions, but at this point it's difficult to discern exactly how much," she added. "In the weeks and months ahead, my colleagues and I will be attentive to signals that indicate whether the recovery is progressing in line with our earlier expectations."
After more than five years of ultra accommodative policies in the wake of the recession, the Fed is taking the first steps to wind them down. It modestly trimmed a bond-buying program in each of the last two months and, according to forecasts, it plans to raise interest rates some time next year as long as the economy continues to improve.
The bond-buying is now running at $65 billion a month.
On Thursday, Yellen reinforced that the Fed expects to continue drawing down the program and shelve the purchases some time in the fall. She repeated that the purchases were not on a preset course and that the Fed would reconsider its plan if there were a "significant change" to the economic outlook.
But first the Fed needs to get a "firmer handle" on whether the soft data are due to weather or some more fundamental slowdown, Yellen said.
Interest rates have been near zero since the worst of the financial crisis in late 2008; the Fed has meanwhile swollen its balance sheet to more than $4 trillion in a further attempt to stimulate investment, hiring, and growth in the United States.
The severe weather also depressed residential construction and industrial production in January and put a damper on home resales last month.
Read more at http://www.philly.com/philly/business/20140228_Yellen_nods_to_cold_weather__says_unclear_impact_on_economy.html#ADjVGd1sBtw4uttJ.99
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