WASHINGTON (AP) — Federal Reserve Chair Janet Yellen sought Tuesday to reassure investors that she will embrace the approach to interest-rate policy that her predecessor, Ben Bernanke, pursued before he stepped down as chairman last month.
Yellen told Congress that if the economy keeps improving, the Fed will take "further measured steps" to reduce the support it's providing through bond purchases.
In her first public comments since taking over the top Fed job last week, Yellen said she expects a "great deal of continuity" with Bernanke. She signaled that she supports his view that the economy is strengthening enough to withstand a pullback in stimulus but that rates should stay low to further improve a still-lackluster economy.
Her message of continuity at the Fed was a reassuring one for investors, and it contributed to a major rally on Wall Street. The Dow Jones industrial average closed up 193 points.
Yellen's remarks to a House committee suggested that the Fed will keep its key short-term rate near zero for a prolonged period.
"The recovery in the labor market is far from complete," Yellen said, an indication that the Fed is in no hurry to boost short-term rates.
She said the Fed is monitoring volatility in global markets but doesn't think it poses a serious risk to the United States at the current time.
"Since the financial crisis and the depths of the recession, substantial progress has been made in restoring the economy to health and strengthening the financial system," Yellen said in her testimony for the House Financial Services Committee. "Still, there is more to do."
Some Republicans expressed concern that the Fed's extraordinary support could ignite high inflation or destabilize financial markets. The committee chairman, Jeb Hensarling, R-Texas, a critic of the Fed, said there were "clearly limits to what monetary policy can achieve."
Hensarling questioned whether the Fed had sent confusing signals to investors by changing its possible timetable for future actions on interest rates.
Yellen, the first woman to lead the Fed in its 100 years, was delivering the Fed's twice-a-year report to Congress a week after being sworn in to succeed Bernanke. He stepped down Jan. 31 after eight years as chairman.
Several committee members praised Yellen for breaking down a gender barrier at the Fed. Rep. Gregory Meeks, D-N.Y., told Yellen she would serve as an inspiration for his three daughters and said: "You have done it the old-fashioned way. You have earned it."
At the start of the hearing, Hensarling mentioned that Yellen had agreed to stay all day if necessary to allow all members of one of Congress' largest committees to question her. That was a break from recent practice, in which Bernanke and his predecessor, Alan Greenspan, tended to sit for questions for only two or three hours.
Yellen ended her testimony just short of six hours after the hearing began. The panel did take a 30-minute lunch break and two shorter breaks. At the end of the marathon session, Hensarling thanked Yellen for her "stamina."
The Fed chair drew praise for her direct responses. Rep. Shelley Moore Capito, R-W.Va., said she'd been able to understand more of Yellen's answers than she had the responses of Bernanke or Greenspan.