Yellen, in Testimony, Says Fed Has More Work to Do
WASHINGTON—The U.S. economy has made "good progress" since the depths of the recession, but has farther to go in regaining what was lost, Federal Reserve Vice Chairwoman Janet Yellen will tell lawmakers Thursday during a hearing on her nomination to be the next leader of the Federal Reserve. Unemployment, at 7.3% in October—down from a recent peak of 10% in 2009—"is still too high, reflecting a labor market and economy performing far short of their potential," Ms. Yellen will say in her opening statement to senators, according to her prepared remarks, released Wednesday afternoon. Inflation remains below the central bank's 2% target and will likely remain low for some time, Ms. Yellen said. Both factors are motivating the Fed's efforts to boost the economic recovery, Ms. Yellen said. She defended the Fed's controversial $85 billion-per-month bond-buying program, anticipating criticism from some senators. "A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases. I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy." The hearing is scheduled to start at 10 a.m. before the Senate Banking Committee, which has jurisdiction over Fed nominees. Ms. Yellen's opening statement also addressed her support for Fed Chairman Ben Bernanke's efforts to make the central bank more open and transparent. She also pledged to use the Fed's regulatory tools to strengthen the financial system. "I am committed to using the Fed's supervisory and regulatory role to reduce the threat of another financial crisis," she said. Senators of both parties expect she will be confirmed to take over when Mr. Ben Bernanke steps down Jan. 31.