Traverse City Record-Eagle

Business

February 11, 2014

New Fed chief to speak today

WASHINGTON (AP) — When Janet Yellen makes her first public remarks today since succeeding Ben Bernanke as Federal Reserve chair, her every word will come under scrutiny.

Will she embrace all of Bernanke’s policies? When will the Fed raise short-term interest rates? Is she worried about the economy or the stock market?

Don’t expect many direct answers when Yellen addresses a House Financial Services Committee hearing. Her replies will most likely boil down to a single overarching point: The Fed will keep all its options open depending on how the economy evolves.

Even so, anticipation of Yellen’s testimony is running high, given concerns about the economy and the job market, turmoil in global markets and uncertainty about her direction at the Fed.

After a rocky 2014 so far, nervous investors will be paying particularly close attention. They want to know whether Yellen might deviate from the message the Bernanke Fed sent late last year: That Fed officials think the economy’s outlook is bright enough to withstand a slight pullback in their stimulus but that rates should stay low to fuel a still-subpar economy.

The occasion is the Fed’s twice-a-year report to Congress on interest-rate policy and the economy. After Tuesday’s House hearing, Yellen will address the Senate Banking Committee on Thursday. Next month, she’ll preside over her first Fed meeting and hold her first news conference.

Yellen, 67, the first woman to lead the Fed in its 100 years, was sworn in Feb. 3 for a four-year term. As vice chair for three years and long a leading economist, she has given speeches and addressed congressional committees. But as Fed chair, considered the world’s most powerful economist post, the spotlight will burn much brighter.

“A new Fed chair’s first testimony is always a testing period,” said Diane Swonk, chief economist at Mesirow Financial.

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