Economics
Yellen Sees ‘Plausible Ways’ Hot Economy Could Heal Growth
- Fed Chair warns strategy could also create financial risk
- Yellen: Costs of low rates for too long may exceed benefits
Fed's Yellen Reflects on Lesson Learned From Crisis
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Federal Reserve Chair Janet Yellen said there are “plausible ways” that running the U.S. economy hot could fix damage caused by the Great Recession, laying out the argument for keeping monetary policy easy without taking an interest-rate hike off the table this year.
“Increased business sales would almost certainly raise the productive capacity of the economy by encouraging additional capital spending,” Yellen told a Boston Fed conference Friday dedicated to examining the elusive economic recovery. “A tight labor market might draw in potential workers who would otherwise sit on the sidelines.”