Janet L. Yellen, the chairwoman of the Federal Reserve, told congress that the central bank is satisfied by the recent economic growth, but it is still debating when the appropriate time is to raise interest rates. She said that the next step would be an announcement that the government is considering raising its benchmark rate as soon as March, which means the possibility of a rate increase as early as June. However, according the Yellen, the government is hesitant because "Despite this improvement, too many Americans remain unemployed or underemployed, wage growth is still sluggish and inflation remains well below our longer-run objective." Yellen claims that the bank will not raise rates until it was confident that inflation would rise back to the Fed's 2% annual goal.
Republicans are concerned that the government is moving too slowly, while Democrats are worried about a premature retreat. Senator Richard C. Shelby (Republican from Alabama) suggested that the government might be risking higher future inflation by continuing to suppress borrowing costs. On the contrary, Senator Sherrod Brown (Democrat from Ohio) countered concerns about inflation stating, "Low wage growth has continued for the majority of Americans, and the declining participation in the work force is troubling."
The remainder of hearing before the Senate Banking Committee was dedicated to legislative proposals aimed at reducing the autonomy of the government. Senator Rand Paul (Republican from Kentucky) strongly urged the passage of the "Audit the Fed" bill, which would require the Government Accountability Office to conduct regular reviews of the central bank's making of monetary policy. Yellen asserted that this bill is misleading and harmful, and provided financial statements to demonstrate that the central bank is already audited. This bill is controversial over the fact of whether or not Congress should be able to have oversight of further reforms.
Summary by MedicalGroups.com
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