Here’s How the Federal Reserve Is Defending Its Monetary Policies

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Speaking at the Federal Reserve’s “A Trans-Atlantic Agenda for Shared Prosperity” conference, vice-chair Janet Yellen explained why she thinks America has found it difficult to recover from the so-called Great Recession and addressed whether the persistence of long-term unemployment is due to structural problems in the labor markets or simply cyclical shortfalls in demand.

She also stated that the Federal Reserve would likely keep the benchmark lending rate near zero, defending the central bank’s aggressive monetary policy. The Federal Open Market Committee announced in December that it would keep the rate near zero as long as inflation was not forecast to increase more than 2.5 percent in one to two quarters and unemployment stays above 6.5 percent.

However, Yellen said in her speech on Monday that those objectives were merely “thresholds for possible action, not triggers that will necessarily prompt an immediate increase” in the FOMC’s target rate. “When one of these thresholds is crossed, action is possible but not assured,” she added…

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