When pressed for an estimate for a "beginning of the tapering" of bond purchases, Yellen said, "we have seen meaningful progress in the labor market" and that the Federal Open Market Committee was looking for signs of "growth that is strong enough to promote continued progress." She held her ground by not providing a "set time" for tapering.
Senator Richard Shelby (R., Ala.), a longtime critic of the Federal Reserve monetary stimulus policy, pointed out that the Fed is now funding a huge portion of the national debt through its purchases of U.S. Treasury bonds. Yellen answered, "we're certainly not doing so for the sake of helping the government finance the deficit. We're doing so to achieve the goals that Congress has assigned to the Federal Reserve, in circumstances where we have run out of scope for conducting additional monetary policy. Once our overnight interest rate hits zero, we have to rely on alternative techniques."
Senator Bob Corker (R., Tenn.) called the Federal Reserve's economic stimulus policy "an elitist policy," since "the largest Wall Street institutions have done the best and fund managers have made a lot of money, but it really hasn't trickled down to the economy." Yellen responded by saying "these policies to some extent boosted the stock market," but that the policies have also "played an important role in helping the housing sector and boosting housing prices."
The KBW Bank Index (I:BKX) rose 0.6% to $66.11, with all but three of the 24 index components showing gains.