The United States Federal Reserve chair Janet Yellen told Congress on Thursday that she is not stepping down. Her statement follows on strong attacks during the campaign from president elect Donald Trump who claimed the Fed was favoring president Barack Obama and candidate Hillary Clinton with its low interest rate policy.
Trump had also suggested that he would replace her at some point. At one point he said that Yellen should be ashamed of her actions, saying her policies were political positions to help President Barack Obama. Amid expectations that the president-elect would step up political pressure on the Fed after he takes office in January, there was speculation that Yellen might just step aside.
No I cannot, she said when asked by Rep. Carolyn Maloney if there were circumstances under which she might leave before her term expires. I was confirmed by the Senate to a four-year term, which ends at the end of January of 2018, and it is fully my intention to serve out that term.
However if Trump removes her from the chair, she could still stay on as a governor until her 14-year term expires in 2024. Though she did not address the current political situation directly or even mention Trump's name, Yellen stressed the need for central bank independence.
Yellen pointed to countries where that is not the case experiencing inflation when central banks are ordered to buy debt to balance budgets.
Markets come to expect low and stable inflation from a central bank that has political independence and good economic performance and I believe that we have seen that both in the United States and globally, she said.
The Fed chair also said that the election results has done nothing to change the Fed's plans for a rate increase relatively soon.
Yellen said the U.S. central bank would change its outlook as necessary as the new administration rolls out plans for perhaps hundreds of billions of dollars in tax cuts and additional government spending. She also suggested the new government keep in mind that the United States is near full employment and inflation may be rising.
Markets are anticipating ... a fiscal package that involves a net expansionary stance of policy and that in a context of an economy that is operating reasonably close to maximum employment with inflation heading back to 2% Yellen said, suggesting new programs focus on policies that would improve ... long run growth and productivity.
For the time being, Yellen said, incoming economic data justified a rate hike relatively soon and, absent any dramatic changes, a gradual pace of hikes after that.