While President Barack Obama’s Affordable Care Act mea culpa stole most of Thursday’s headline space, his nominee for chairman of the Federal Reserve took to Capitol Hill for her Senate confirmation hearings. Federal Reserve vice Chairwoman Janet Yellen spent much of the day defending the central bank’s easy money policies and suggesting that no big changes in monetary policy would occur if her nomination is approved.
Yellen indicated that the Fed may consider scaling back its $85 billion-a-month bond-buying program in the future—the central bank has been saying it will for months—but offered few specifics.
“We’re taking account of the costs and efficacy of that program as we go along. At this point I believe the…benefits exceed the costs,” she told members of the Senate Banking Committee.
Senators on both sides of the aisle expressed concerns that the Fed’s easy money policy is exacerbating income inequality in the U.S.
“It’s not clear to me and it’s not clear to many Americans that have not seen a raise in many years that this policy raises incomes and wages on Main Street,” said Senator Sherrod Brown (D-Ohio) said. “What will you do to help?”
Yellen said that the Fed’s current policies are intended to go through the economy in ripples and are already helping car and home buyers.
“The ripple effects go through the economy and bring benefits to, I would say, all Americans,” Yellen said, continuing, “If we can generate more robust recovery in the context of price stability, then more Americans will see meaningful increases in their well-being.”
When asked by Senator David Vitter (R-La.) whether she would support legislation to audit the Fed like that proposed by Senator Rand Paul (R-Ky.), Yellen said that she “strongly” supports “transparency and openness on the part of the Fed” but not legislative oversight.
“I would be very concerned about legislation that would subject the Federal Reserve to short-term political pressures that could interfere with that independence,” she said.
Paul has told Senate Majority Leader Harry Reid (D-Nev.) that he plans to put a hold on Yellen’s confirmation unless the Senate holds a vote on “Audit the Fed.”
On Wednesday, Senator Ted Cruz (R-Texas) said he supports Paul’s effort.
“I agree with Rand Paul: before the Senate votes on whether to confirm Janet Yellen, we should at the very least allow a vote on the Audit the Fed bill,” Cruz said.