Yellen Says Fed Policy must have Tightening Bias

by Patrick Lunsford, CollectionIndustry.com

San Francisco Federal Reserve Bank President Janet Yellen said Thursday that the Fed ?was prudent? to keep interest rates level in their meeting last month but that the Fed would remain in a posture that skews toward higher interest rates to combat inflation.

“With inflation too high, policy must have a bias toward further firming,” Yellen said in a luncheon speech.

Yellen also stated that it make take a few years before inflationary pressures drop back to acceptable ranges for Fed policymakers.

Yellen went on to note that the negative U.S. savings rate was “a downside risk to the economy, with the chance of a sizable drop-off in consumer spending likely to be bigger than a surge in spending.”