Federal Reserve chairwoman Janet Yellen gives her first
testimony before Congress. Photo by Reuters.
New Federal Reserve chairwoman Janet Yellen provided a
''sugar rush'' to financial markets yesterday by making it
clear there would be no abrupt changes to United States
monetary policy, Craigs Investment Partners broker Greg Easton
Dr Yellen, who took over as head of the Fed from Ben Bernanke
on February 1, said the central bank was on track to keep
reducing its stimulus, even though the labour market recovery
was far from complete.
Mr Easton said Dr Yellen was seen as market friendly and
appeared likely to do her best to avoid the US slipping into
a deflationary environment.
In her testimony to the US House of Representatives, Dr
Yellen said the central bank must keep its eye on the
''unusually high'' incidence of long-term unemployment and
the ''exceptionally high'' proportion of Americans who could
find part-time work as it plotted a tricky reversal of its
accommodative policy stance.
In recent weeks, the Fed had reduced its stimulatory
bond-buying programme by $US20 billion ($NZ24 billion) a
month to $US65 billion as the US economy showed signs of
Under Mr Bernanke, the Fed bought trillions of dollars in
bonds to drive borrowing costs lower and stimulate investment
and hiring. In December, it decided to begin scaling back its
support given a drop in unemployment and strong economic
Mr Easton said Asian markets responded well to Dr Yellen's
comments, with all open markets trading up mid-afternoon New
''The markets were playing catch-up in some ways but were
appreciative of comments the US is supportive of economic
growth. That has filtered through to other markets.''
The Australian All Ordinaries continued its strong run but
there was concern among emerging markets a stronger US dollar
would affect their economic performance, he said.