Yellen: US economy still needs help from Fed
By MARTIN CRUTSINGER
WASHINGTON (AP) a¿¿ The U.S. economy still isn't healthy enough to grow at a consistently strong pace without the Federal Reserve's help.
That was the message Fed Chair Janet Yellen sent Wednesday at a news conference after the central bank ended a two-day policy meeting.
Yellen made clear that despite a steadily improving job market and signs of creeping inflation, the Fed sees no need to raise short-term interest rates from record lows anytime soon.Her remarks followed a statement from the Fed that it would further slow the pace of its long-term bond purchases. The bond purchases have been intended to keep long-term loan rates low. But the Fed offered no clear signal about when it will start raising its benchmark short-term rate. Stock investors appeared pleased with the message that rates would remain low. Major indexes surged more than half a percentage point, with the Standard & Poor's 500 index reaching a record. And the yield on the 10-year Treasury note dipped to 2.59 percent from 2.65 percent late Tuesday. "The last thing that Janet Yellen wants is for the market to think she's anywhere close to tightening," said David Robin, managing director at the brokerage Newedge. "She nailed it." Most economists think a rate increase is at least a year away despite signs of rising inflation. At her news conference, Yellen downplayed inflation concerns. Recent inflation figures are "noisy," she said. Her comment signaled that the Fed doesn't see high inflation as a risk that it would soon need to combat by raising interest rates. David Jones, chief economist at DMJ Advisors, said the Fed and Yellen made plain that the central bank intends to keep rates low for a considerable time. "The Fed is saying the economy still needs help and that inflation is not a threat at the moment," Jones said. "Yellen is a lot more worried at the moment about how the job market is behaving than how inflation is behaving."
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