Tags: Hartmann | Yellen | Fed | meeting

Heidi Hartmann: How Yellen's Fed Will Be Different

By Michael Kling   |   Monday, 17 Mar 2014 11:14 AM

A recent short but revealing speech by new Federal Reserve Chairman Janet Yellen shows how her Fed era will differ from earlier tenures.

The speech at her swearing in ceremony shows the Fed will focus more on average Americans than economic statistics, Heidi Hartmann, president of the Institute for Women's Policy Research, wrote in an article for The Huffington Post.

"I promise to never forget the individual lives, experiences and challenges that lie behind the statistics we use to gauge the health of the economy. The unemployment rate represents millions of individuals who are eager to work, but struggling to provide for themselves and their families," Yellen stated in her speech, saying creating jobs will help "build a stronger community, and to contribute to a more prosperous nation."

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Hartmann was more than pleased at the speech, as well as the swearing in ceremony

"For me, an economist who has dedicated my life to advancing the status of women, experiencing first-hand Janet Yellen's elevation to this leadership position — making her arguably the most powerful woman in the world — was deeply moving," Hartmann said.

The Fed's goals are clear: maximum employment and stable prices, Yellen noted in her speech. "It is equally clear that the economy continues to operate considerably short of these objectives."

Although the Fed has made progress under the guidance of former Fed Chairman Ben Bernanke, much work remains to be done, she said. Yellen also pledged to finish implementing Dodd-Frank regulations and continue striving to explain the Fed's actions.

"I'll do more of that explaining . . . when I respond to questions from the media after the next meeting of the Federal Open Market Committee."

That press conference, scheduled for Wednesday, will be key, according to The Wall Street Journal. Financial markets will be looking for clues on how fast the Fed will taper its bond-buying program. Most importantly, markets will be watching how Yellen moves the Fed "from threshold-predicted forward guidance to more qualitative forward guidance," JP Morgan Chase Chief U.S. Economist Michael Feroli told The Journal.

Previously, the Fed had said it would consider raising interest rates when the unemployment rate, now at 6.7 percent, fell to 6.5 percent. The central bank must replace that hard figure with more qualitative guidance.

"We believe that this switch will be done with an intent to convey no change in the stance of policy, much like Indiana Jones replacing the golden idol with a bag of sand," Feroli said.

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