The U.S. economic recovery remains incomplete, with a still-ailing job market and stagnant wages justifying loose monetary policy for the foreseeable future, Federal Reserve Chair Janet Yellen told a Senate committee on Tuesday.
In a strong defense of the central bank’s current stance, Yellen said that early signs of a pickup in inflation aren’t enough for the Fed to accelerate its plans for raising interest rates, a move currently expected in the middle of next year.
That could change, with interest rates rising sooner and faster, if data show labor markets improving more quickly than expected, she said.
But as it stands, “although the economy continues to improve, the recovery is not yet complete,” Yellen said in semi-annual testimony before the Senate Banking Committee, repeating her focus on lagging labor force participation and weak wage growth as key to any conclusions about the economy’s health.
"Too many Americans remain unemployed," Yellen said.
Yellen presented a broad overview of an economy still in transition from the 2007-2009 economic crisis. In an accompanying report, the Fed said its balance sheet would top out at $4.5 trillion when its bond-buying program ends in October, a sign of how much stimulus the central bank has had to unleash to support the economy.