Tags: Money | Federal Reserve | Yellen | moves

4 Top Fed Moves Under Janet Yellen

By    |   Friday, 10 July 2015 11:49 PM

Janet Yellen didn’t become chairwoman of the Federal Reserve until 2013, but her involvement with the Fed began when she was named to the Federal Reserve Board of Governors in 1994.

After being named president of the Federal Reserve Bank of San Francisco in 2004, she warned of a housing bubble that could hurt the economy. In 2007, she encouraged the Fed to “act pre-emptively” to deal with a coming crisis in the housing and lending markets.

Here are four important moves by the Fed since Yellen became chairwoman.

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1. The policy of quantitative easing, which started under Yellen’s predecessor, Ben Bernanke, continued as Yellen became chairwoman. The Fed had been purchasing long-term government and mortgage-backed securities with the hope of promoting more borrowing and spending within the private sector. The easing policy reduced the Fed’s purchases of securities by about one-third by April 2014, according to Victor Li in U.S. News & World Report.

2. In 2014, Yellen eliminated the target unemployment rate in considering the raising of interest rates, which observers applauded because they didn’t consider an unemployment rate an adequate indicator of the state of the economy. Yellen believed that the labor market was too weak to consider raising interest rates during her first few months in office.

3. In March 2015, Yellen announced the Fed would consider raising interest rates gradually because the labor market was still on shaky ground and there were fears of another economic downturn, USA Today reported. Interest rates set by the Fed remained at near zero percent levels since the 2008 financial crisis. Yellen said that research had suggested the economy would continue to grow slowly because of limited productivity in the technological sector.

4. Yellen and Federal Reserve members indicated they would remain patient in considering interest rate hikes by May 2015. U.S. economic growth continued to appear uncertain, which suggested a longer wait for a rate increase and could affect inflation. Although figures showed job creation was improving, wages remained stagnant, a sign that consumer spending would stay weak. Also, job reports weren’t reliable since millions of Americans had left the workforce due to lack of job opportunities or low wages, according to Business Insider.

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Janet Yellen didn't become chairwoman of the Federal Reserve until 2013, but her involvement with the Fed began when she was named to the Federal Reserve Board of Governors in 1994.
Federal Reserve, Yellen, moves
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2015-49-10
Friday, 10 July 2015 11:49 PM
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