Markets jump on Yellen’s jobs speech
Chair of the Federal Reserve, Janet Yellen, has been speaking in Chicago on the health of the US economy and what the Fed's doing to promote a stronger jobs market.
For many Americans, she said, “the recovery still feels like a recession” and “it also looks that way in some economic statistics”.
The US economy needs extra support “for some time”, she said – a view which is “widely shared” by fellow policymakers.
Markets have responded positively to her remarks. The Dow (pictured) is up 0.8 per cent at 16,447, and the Nasdaq’s gained almost one per cent at 4,196.
Source: Google
Bonds have also got a boost and the dollar’s moved lower.
On European markets, the FTSE’s up 0.2 per cent at 6,628, as is the Dax, at 9,603.
Yellen added that while the Fed’s trimming its quantitative easing programme, it doesn’t mean it’s any less committed to economic stimulus.
The Fed is continuing to work on two goals assigned to it by Congress: ensuring maximum sustainable employment, and keeping inflation under control.
And despite the recovery making progress, there is still considerable "slack" in the economy, meaning a loose monetary policy can be maintained without inflation getting out of control, she explained.
Slack means that there are significantly more people willing and capable of filling a job than there are jobs for them to fill.
Judging how much slack there is in the labor market is one of the most important questions that my Federal Reserve colleagues and I consider when making monetary policy decisions, because our inflation goal is no less important than the goal of maximum employment.
The Fed chair said the decline in jobless is “gradual but remarkably steady”. The jobless rate’s currently 6.7 per cent – higher than it was during the recession of 2001.
She then stressed the importance of helping people find jobs, and that a big part of that is creating jobs. She said the Fed’s taken “extraordinary steps” since the beginning of the crisis to create jobs, and she believes those efforts “are still needed”.