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Yellen Says U.S. Economy May Strengthen This Year, Time Reports

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Jan. 9 (Bloomberg) -- Janet Yellen, confirmed this week by the Senate to succeed Ben S. Bernanke as Federal Reserve chairman, said in an interview with Time magazine that the U.S. economy will accelerate this year and more employment opportunities may follow.

“I think we’ll see stronger growth this year,” Yellen said. “Most of my colleagues on the Fed’s policy making committee and I are hopeful that the first digit” of gross domestic product “could be 3 rather than 2.”

She added that “the recovery has been frustratingly slow, but we’re making progress in getting people back to work, and I anticipate that inflation will move back toward our longer-run goal of 2 percent.”

Yellen, 67, was confirmed by the Senate on Jan. 6 to replace Bernanke and is the first woman to head the Fed. She will preside over an unwinding of the central bank’s unprecedented stimulus program if the economy performs as forecast.

The Fed took the first step toward the exit last month when it announced plans to reduce the monthly pace of asset purchases to $75 billion from $85 billion, citing evidence of improvement in the labor market.

In the Time interview, Yellen pushed back at suggestions that the asset purchases are “just helping the rich.”

Policy Goal

“It’s not true,” she said. “Our policy is aimed at holding down long-term interest rates, which supports the recovery by encouraging spending.”

Part of the stimulus “comes through higher house and stock prices, which causes people with homes and stocks to spend more, which causes jobs to be created throughout the economy and income to go up through the economy.”

Yellen said that her first priority, when she replaces Bernanke after his term ends Jan. 31, is reducing joblessness.

“I’d like to see real wages going up,” she said.

On banking regulation, she called the 2010 Dodd-Frank Act “a good road map” that “lays out most of the steps that are necessary. But we may also need to take some further steps that have not been taken yet.”

To contact the reporter on this story: Vince Golle in Washington at vgolle@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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