Yellen Defends QE as Economic Benefit in Letter to Senator
Nov. 19 (Bloomberg) -- Janet Yellen, the nominee for Federal Reserve chairman, defended the central bank’s bond purchases in a letter to a U.S. senator, saying they boosted economic growth and provide benefits that exceed the risks.
* “By putting downward pressure on longer-term interest rates
and helping to make financial conditions more accommodative,
the Federal Reserve’s asset purchases have supported a
stronger economic recovery, improved labor-market conditions
and helped keep inflation closer to its 2 percent
objective,” Yellen said in a Nov. 18 response to questions
from Senator David Vitter, a Republican from Louisiana * In a separate letter to Senator Elizabeth Warren, Yellen
said “monetary policy is likely to remain highly
accommodative for a long time,” even after the Fed reaches
thresholds for considering an increase in the main interest
rate * Senator Jerry Moran, a Kansas Republican, asked Yellen about
steps the Fed was taking to ease the regulatory burden on
community banks; Yellen responded in a letter that the
assumption big banks will be bailed out by the govt is “a
damaging economic phenomenon that corrodes market discipline
of our largest banking firms and contributes to an un-level
playing field between large banks and small banks”
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