Federal Reserve Chair Janet Yellen says the buck now “stops with me.”
Yellen gave her first news conference on Wednesday as head of the central bank, a highly anticipated event that is being closely watched by financial markets and other Fed observers looking to gain a better understanding of how she will run the Fed.
Yellen said that the economy continues to improve but that the labor market has yet to fully recover and the central bank will keep up its economic stimulus efforts.
Yellen took charge of the Fed on Feb. 3 becoming the first woman to lead the central bank.
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Asked how life has been different around the Fed since she took over, Yellen said she now feels the weight of running the institution but that overall she doesn’t anticipate big changes for the central bank.
“I feel I’m very lucky that I’ve had a lot of Fed experience to draw on as I approach this role because it’s complicated and now in many ways I feel that the buck stops with me in terms of management of the FOMC and responsibility to assure that the Federal Reserve makes progress on its goals,” she said, before adding “In terms of the conduct of business, it’s pretty much the same as usual. I’m not envisioning — nor have there been so far — any radical changes in how the Federal Reserve does its business and that includes operating” the Fed’s policy setting committee.
Yellen used her first news conference to elaborate on the Fed’s recent policy decisions as well as to discuss the impact this winter’s bad weather has had on the economy.
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“Unusually harsh weather in January and February has made assessing the underlying strength of the economy especially challenging,” Yellen said reading from a prepared statement from behind a desk.
She said she is particularly concerned about the amount of people who have been unemployed for an extended period of time.
“The share of long term unemployment has been immensely high and has been very stubborn in bringing down,” she said. “That’s something I watch closely.”
While her first news conference has been highly anticipated, Yellen, 67, has had a few practice rounds already. She appeared before both the House Financial Services and Senate Banking committees in recent weeks where she faced a wide range of questions from eager lawmakers.
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The news conference is another opportunity for Yellen to set the tone for her tenure and lay out her vision for the Fed — as well as distinguish herself in any way from her predecessor, Ben Bernanke.
Yellen’s most significant challenge in the months ahead will be to oversee the winding down of the Fed’s stimulus program, known as quantitative easing. On Wednesday, the Federal Open Market Committee (FOMC) announced that the central bank will reduce the amount of bonds it buys each month to keep long-term interest rates low by another $ 10 billion. It will now buy $ 55 billion in Treasury and mortgage bonds each month.
In another closely watched move, the FOMC on Wednesday updated its guidance with regard to when it could raise short-term interest rates.
The committee had previously said rates would stay at or near zero “at least as long as” the unemployment rate remains above 6.5 percent and inflation appears likely to remain below 2.5 percent.
Now, the Fed says it will likely be appropriate to keep rates below normal levels “for a considerable time” after its quantitative easing program ends, particularly if inflation remains below 2 percent and does not look like it will rise over the “longer-term.”
Financial markets have been keeping a close eye on how quickly the Fed will implement the “taper” and whether any new economic date will cause the central bank to pause he wind down of its economic stimulus program.
Another challenge for Yellen will be to communicate as clearly as possible the central bank’s decision-making process. Ambiguity can create room for investors to draw their own conclusions, which can lead to market volatility.
Yellen says she feels "weight" of leading Fed
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