Feb. 11 - Federal Reserve Chair Janet Yellen, in testimony to Congress said the labor market recovery is still far from complete, despite a drop in unemployment, but not enough to alter the Fed's tapering of extra stimulus. Bobbi Rebell reports.
Janet Yellen proved popular with the markets in her first testimony to Congress- stocks rallied, and gold rose to a three-month high after she made it clear that while the job market needs to improve, she would not make any abrupt changes to the central bank's commitment to a measured tapering of bond purchases. SOUNDBITE: JANET YELLEN, CHAIR, FEDERAL RESERVE (ENGLISH) SAYING: "We would be looking at a broad range of data in the labor market, including unemployment, job creation and many other indicators of labor market performance. We would also be looking at indicators of spending and growth in the economy, because we do need to see growth in an above-trend pace in order to project continued improvement in the labor market. And we note that inflation is running well below our objective and we want to be sure that that is moving back toward our objective." She also said a potential headwind had been removed with the Republicans agreeing to a 'clean' debt limit bill. Overall she had a lot in common with her predecessor, Ben Bernanke, says Jim Bianco of Bianco Research: SOUNDBITE: JIM BIANCO, PRESIDENT, BIANCO RESEARCH (ENGLISH) SAYING: "Probably at the margin she'd be more willing to slow the taper if the economy were to show protracted weakness, because she believes that QE (quantitative easing) affects the jobs market and that QE works. There is no QE fatigue in her mind. So if we were to see protracted weakness as she said, you could look for her to stop. But no, we don't have protracted weakness, but I think the door is a little more open with her than it would have been with Bernanke. But again, we are kind of splitting hairs here. They are very similar." He was, however, surprised she seemed uneasy with questions about regulation: SOUNDBITE: JIM BIANCO, PRESIDENT, BIANCO RESEARCH (ENGLISH) SAYING: "She is a regulator. It seemed like she is very lacking or maybe just stumbled. She gets to speak again in two days. When it comes to the regulatory aspects of being the Fed Chairman and that is something that needs to be addressed with her. What are your plans with the Volcker rule? What are your cost benefit analysis that you plan on doing? What are your plans with Basel 3 and the capital requirements? And looking like you don't know is not a good answer for the Federal Reserve Chairman in their first speech." Yellen will get a chance to fix that perception- she is scheduled to speak to a Senate committee later this week.