Last week featured testimony by two Chairpeople of the Federal Reserve or more specifically the current and latest former.
Janet Yellen, the newly minted Chair of the Fed, was most noted for her reply to a question regarding the pace of asset purchases and the taper there of.
“Asset purchases are not on a preset course, so if there’s a significant change in the outlook, certainly we would be open to reconsidering, but I wouldn’t want to jump to conclusions here,†or it would seem, does Janet want anyone else to jump. The markets did applaud JY’s testimony by breaching the 1850 level on the S&P later in the week after a few failed attempts.
Some other points of note in Ms. Yellen’s remarks worth noting were her concurrence with the CBO that raising the minimum wage to $10.10 would cause the loss of 500,000 jobs. The White House had said the CBO had overstated the job loss number but in true Fed independent fashion Janet she “wouldn’t want to argue with their [CBO’s] assessment.
Not only is Ms. Yellen’s independent streak evident with the White House but also with her former boss and now ex-Fed Chief Ben Bernanke. The two seem to disagree on the effect the Fed’s low interest rate policy in the 2000’s had on the housing market. Helicopter Ben, as he has been known from time to time, said the Fed’s policy at the time had no inflating effect on the housing market while Janet again said she “would not argue†with the economists that think there was a direct correlation between the low rates at the time and the increase in leverage in the financial system and the housing bubble.
One thing almost every person, economist or not, can agree on is the debilitating effects this winter has had on those in the Northeast. Ms. Yellen acknowledged as much saying that “unseasonably cold weather†had played a part in some of the disappointing economic numbers recently reported. That her testimony was originally supposed to be delivered on February 13 but was delayed until last Thursday because of a storm is proof enough of her estimation.
