Friday, April 17, 2015
YOLO COUNTY NEWS
99 CENTS

Yellen foresees continued low borrowing rates

By
From page A2 | May 07, 2014 |

WASHINGTON (AP) — Federal Reserve Chair Janet Yellen said Wednesday that the U.S. economy is improving but noted that the job market remains “far from satisfactory” and inflation is still below the Fed’s target rate.

Speaking to Congress’ Joint Economic Committee, Yellen said that as a result, she expects low borrowing rates will continue to be needed for a “considerable time.”

Yellen’s comments echo her earlier signals that the Fed has no intention of acting soon to raise its key target for short-term interest rates even though the job market has strengthened and economic growth is poised to rebound this year. The Fed has kept short-term rates at a record low near zero since December 2008.

At the same time, Yellen cautioned that geopolitical tensions, a renewal of financial stress in emerging markets and a faltering housing recovery pose potential threats.

“While conditions in the labor market have improved appreciably, they are still far from satisfactory,” Yellen said. “Even with recent declines in the unemployment rate, it continues to be elevated.”

Rep. Kevin Brady, R-Texas, the committee chairman, pressed Yellen to specify when the Fed might start raising short-term rates and how it will act to pare its record holdings of Treasury and mortgage bonds.

Yellen said she couldn’t give a date. But she said the Fed expects to begin raising rates when it sees enough progress in restoring full employment and when inflation has returned to its target of 2 percent.

She pointed to the Fed’s latest quarterly economic forecasts, which showed that most members expect the Fed to begin raising short-term rates in 2015 or 2016.

Yellen noted that even when the Fed’s bond purchases end, it intends to maintain its high level of holdings and will begin to reduce them only when the economy can withstand the pullback. The Fed’s record investment portfolio exceeds $4 trillion.

But Yellen also stressed that the Fed wants to avoid past mistakes of keeping its policies loose for too long and thereby fueling inflation. She noted the prolonged bout of high inflation of the 1970s.

“The lessons of that period are very real to all of us, and none of us want to make that mistake again,” Yellen said, referring to her Fed colleagues.

Yellen’s testimony marked her first chance to discuss the economy since the Fed met last week and the government said Friday that the economy added 288,000 jobs in April, the biggest hiring surge in two years. The unemployment rate dropped to 6.3 percent, its lowest point since 2008, from 6.7 percent in March.

But the unemployment rate fell that far because many fewer people began looking for work in April, thereby reducing the number of unemployed. The proportion of Americans who either have a job or are looking for one has reached a three-decade low.

Still, at last week’s Fed meeting, the central bank indicated that it saw signs of a strengthening economy. It approved a fourth $10 billion reduction in its monthly bond purchases to $45 billion, down from an original $85 billion. The Fed has been buying bonds to try to keep long-term rates low.

The Fed is expected to end its bond purchases by year’s end. But even when it does, the Fed will maintain its holdings at a record level above $4 trillion, thereby providing continued downward pressure on long-term rates.

In its statement last week, the Fed reiterated its expectation that short-term rates would remain near zero for a “considerable time” after the bond buying program ends. Yellen repeated that language Wednesday.

“Many Americans who want a job are still unemployed, inflation continues to run below (the central bank’s) longer-run objectives and work remains to further strengthen our financial system,” she said.

In a speech last month in New York, Yellen had stressed the need for the Fed to remain flexible in deciding how to manage interest rates. She said that it was important to be able to respond to “significant unexpected twists and turns the economy may make.”

Many Republicans have expressed concerns that the Fed’s low-rate programs are raising the risks of financial market instability and high inflation in the future.

Comments

comments

The Associated Press

.

News

Psychedelic rock posters recall 1960s concerts

By Jeff Hudson | From Page: A1 | Gallery

 
UCD study: Crickets not enough to feed the world just yet

By Kathy Keatley Garvey | From Page: A1

It’ll be a perfect day for a picnic — and lots more

By Tanya Perez | From Page: A1 | Gallery

 
Turning a mess into olive oil success

By Dave Jones | From Page: A1 | Gallery

UCD expands emergency notification service

By Julia Ann Easley | From Page: A2

 
California vaccine bill stalls; will come back next week

By The Associated Press | From Page: A2

Cities: California water reduction order unrealistic, unfair

By The Associated Press | From Page: A2

 
Bob Dunning: Chasing criminals and water-wasters

By Bob Dunning | From Page: A2

Enjoy a chemistry bang on Picnic Day

By Enterprise staff | From Page: A3

 
Start your Picnic Day with pancakes

By Enterprise staff | From Page: A3

Local students to perform at fundraising concert

By Jeff Hudson | From Page: A3 | Gallery

 
CA House hosts crepe breakfast

By Enterprise staff | From Page: A3

Doxie Derby crowns the winning wiener

By Enterprise staff | From Page: A3

 
Fundraiser benefits Ugandan women

By Enterprise staff | From Page: A3

See pups at Picnic Day

By Enterprise staff | From Page: A4 | Gallery

 
Davis poet will read his work at library

By Enterprise staff | From Page: A4

Free blood pressure screenings offered

By Enterprise staff | From Page: A4Comments are off for this post

 
Rotary Club hosts whisky tasting

By Enterprise staff | From Page: A4

Ribs and Rotary benefits local charities

By Enterprise staff | From Page: A4

 
Dodd plans fundraising barbecue in Davis

By Enterprise staff | From Page: A4

Soroptimists set date for golf tourney

By Enterprise staff | From Page: A4

 
Socks collected for homeless veterans

By Enterprise staff | From Page: A4

Council will present environmental awards Tuesday

By Special to The Enterprise | From Page: A5

 
Invention and upcycling to be honored at Square Tomatoes Fair

By Special to The Enterprise | From Page: A5

 
Take a peek at Putah Creek on daylong tour

By Special to The Enterprise | From Page: A5 | Gallery

Pence Gallery Garden Tour tickets on sale

By Enterprise staff | From Page: A5

 
UC Davis Circle K Club wins awards at district convention

By Special to The Enterprise | From Page: A6

Davis authors featured at writing conference in Stockton

By Special to The Enterprise | From Page: A6

 
Sign up soon for Davis history tour

By Enterprise staff | From Page: A6 | Gallery

Campus firearms bill passes Senate committee

By Special to The Enterprise | From Page: A6

 
Emerson featured at photography program

By Special to The Enterprise | From Page: A6

Portuguese influence in Yolo County detailed

By Special to The Enterprise | From Page: A6

 
Concert and dance party celebrate KDRT’s 10 years on the air

By Special to The Enterprise | From Page: A7 | Gallery

 
Survival skills to be taught at preserve

By Special to The Enterprise | From Page: A9

.

Forum

The new one puts her foot down

By Creators Syndicate | From Page: B5

 
Tom Meyer cartoon

By Debbie Davis | From Page: A8

It’s time to fight for California’s jobs

By Special to The Enterprise | From Page: A8

 
Future leaders give back

By Letters to the Editor | From Page: A8

 
Know where your gift is going

By Letters to the Editor | From Page: A8

Pipeline veto a good move

By Letters to the Editor | From Page: A8

 
Artists offer heartfelt thanks

By Letters to the Editor | From Page: A8

.

Sports

DHS boys drop another Delta League match

By Enterprise staff | From Page: B1 | Gallery

 
Aggie women ready to host (win?) Big West golf tourney

By Bruce Gallaudet | From Page: B1

New strength coach hopes to stem UCD football injury tide

By Bruce Gallaudet | From Page: B1 | Gallery

 
Herd has too much for Devil softballers

By Enterprise staff | From Page: B1

Les, AD Gould talk about the Aggie coach’s future

By Bruce Gallaudet | From Page: B1

 
UCD roundup: Quintet of Aggie gymnasts honored for academics

By Enterprise staff | From Page: B2 | Gallery

 
River Cats fall to Las Vegas

By Enterprise staff | From Page: B12

 
Diamondbacks defeat Giants in 12 innings

By The Associated Press | From Page: B12 | Gallery

.

Features

DSF kicks off 10th anniversary celebration at the carousel

By Anne Ternus-Bellamy | From Page: B5

 
Many summer enrichment opportunities available for students

By Anne Ternus-Bellamy | From Page: B5

 
What’s happening

By Anne Ternus-Bellamy | From Page: B5

.

Arts

‘True Story:’ In their dreams

By Derrick Bang | From Page: A10 | Gallery

 
‘Once’ an unforgetable celebration of music, relationships

By Bev Sykes | From Page: A11 | Gallery

 
.

Business

Honda shows off new Civic at New York show

By The Associated Press | From Page: B3

 
.

Obituaries

Ruth Rodenbeck Stumpf

By Enterprise staff | From Page: A4

 
Robert Leigh Cordrey

By Enterprise staff | From Page: A4

.

Comics

Comics: Friday, April 17, 2015

By Creator | From Page: B10