U.S. Federal Reserve vice chair Janet Yellen on Thursday signaled that the central bank’s monetary easing policies will continue until the U.S. economy substantially improves.
Against the background of high unemployment rate at 7.7 percent, the Fed’s mandate calls for a “highly accommodative monetary policy,” Yellen said here at the Society of American Business Editors and Writers 50th Anniversary Conference.
Starting in late 2008 and continuing through today, the Federal Reserve has purchased assets including agency-guaranteed mortgage- backed securities and longer-term Treasury securities that have added about 2.5 trillion U.S. dollars to its balance sheet, she noted.
“At some point it will be appropriate to cease adding to accommodation and, later, to begin the process of withdrawing the significant accommodation required by the extraordinary conditions caused by the financial crisis,” she said.
Since the onset of the financial crisis, the Fed has kept its short-term interest rate at a historically low level and completed two rounds of quantitative easing programs, known as QE1 and QE2. It is now purchasing longer-term government debt and mortgage- backed securities at a pace of 85 billion U.S. dollars per month, dubbed as the QE3, to stimulate economic growth.