On Tuesday, Janet Yellen presented the Federal Reserve’s semiannual Monetary Policy Report to Congress. Speaking about the economic recovery, monetary policy and the financial systems in place, she expressed optimism about developments in the economy in recent months.
In her first testimony before Congress she said, “I expect a great deal of continuity in the Federal Reserve’s approach to monetary policy. I served on the committee as we formulated our current policy strategy and I strongly support that strategy, which is designed to fulfill the Federal Reserve’s statutory mandate of maximum employment and price stability.”
She acknowledged the important contributions of the previous chairman Ben Bernanke, who steered the Fed during some of the biggest financial challenges sine the Great Depression. Yellen said, “His leadership help make our economy and financial system stronger and ensured that the Federal Reserve is transparent and accountable. I pledge to continue that work.”
When Janet Yellen was announced as the new chairperson of the Federal Reserve it was a major milestone. As she is the first women to take of the head role of the US Central Bank or any other major central bank. Bringing experience to the job, she worked as an international economist in the 1970’s and returned in the 1990’s to serve on the Federal’s Board of Governors, before joining the Clinton administration as head of the Council of Economic Advisors.
The Central Bank will continue reducing its monthly bond-buying, this is because Mrs Yellen is one of the leading proponents of the bond-buying scheme and promoted it when it was first introduced. It has committed to a further $10billion reduction this month.
This method is based on the Federal Reserve’s assessment of a broad range of measures of labour market conditions, indications of inflation pressures and inflation expectations, and readings on financial developments.
At her White House nomination she said, “The Federal Reserve can help if it does its job effectively”. Last year, 56 senators voted in favour of Janet Yellen with 26 opposed and many members of the chamber unable to attend the vote because of extreme weather.
Democrats have praised Yellen as being the right person for job and lead the Federal Reserve at this moment. President Obama said after the vote, “The American people will have a fierce champion who understands that the ultimate goal of economic and financial policymaking is to improve the lives, jobs and standard of living of Americans workers and their families.”
In his State of Union address, President Obama promised to tackle economic inequality by bypassing a damaged Congress. Using the phrase ‘ladders of opportunity’, he said that income inequality should be an area of economic focus. It is evident that they both have an aim to improve the standard of living for all Americans by using democratic economic policy.
Within that speech Obama appealed to Congress to approve a rise in the national minimum wage, which is currently $7.25 per hour. If approved it will be welcome news to many Americans as in the last decade, wages have stagnated for white collar workers and university educated workers. It would lift the minimum wage for all workers across the board to $10.10.
Should the Federal Reserve continue with its expansionary monetary policy and is it improving the standard of living for Americans?