By MARTIN CRUTSINGER
WASHINGTON (AP) a¿¿ When Janet Yellen faces a Senate hearing Thursday on her nomination to lead the Federal Reserve, she is sure to face skepticism from Republicans who say the Fed's policies may be swelling asset bubbles or raising the risk of high inflation.
The one thing investors will most want to know is the one thing Yellen isn't likely to say: When she expects the Fed to scale back its stimulus for the economy.
In testimony prepared for the hearing, Yellen says the economy has regained ground lost to the recession. But she says unemployment remains too high and notes that the Fed is still trying to accelerate the recovery."For these reasons, the Federal Reserve is using its monetary policy tools to promote a more robust recovery," Yellen says in her testimony. "I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy." As chairman, Yellen would likely extend the low-interest-rate policies pushed by the departing Ben Bernanke. As vice chairman, she's been a key architect of those policies. And in her prepared testimony, she offers no hints that she would deviate from them. Yellen's prepared remarks amount to a defense of the extraordinary measures the Fed has used to try to keep long-term borrowing rates near historic lows to encourage spending and promote growth. She's expected to stress Thursday that the Fed under her leadership would honor its dual mandate: To maximize job growth and keep prices stable. Yet at a time of still-high unemployment (7.3 percent) and low inflation (sub-2 percent), a Yellen-led Fed would likely favor Bernanke's approach of keeping rates low until the job market and economy improve consistently. Even with some Republican resistance, Yellen's backing by the Senate Banking Committee and confirmation by the full Senate is viewed as all but assured. But approval won't come before critics air their grievances about the Fed's response to the financial crisis and the Great Recession.