New U.S. Fed chief Janet Yellen says stimulus cuts will continueUpdated: 2014-02-12 21:52:44 KST
In her first public appearance as Federal Reserve Board chair on Tuesday, Janet Yellen told Congress that, while the labor market recovery still has a way to go despite a drop in unemployment, the Fed will continue to reduce the support it's providing the U.S. economy through monthly bond purchases.
"The recovery in the labor market is far from complete. Purchases are not on a preset course, and the Committee's decisions about their pace will remain contingent on its outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases."
Analysts say Yellen's testimony signals a continuation of the policies started under her predecessor, Ben Bernanke.
Under Bernanke, the Fed bought trillions of dollars worth of bonds to drive long-term borrowing costs lower.
In December of last year, it started to scale back its stimulus program.
The new Fed chief also noted the recent turbulence in the world's financial markets.
"We have been watching closely the recent volatility in global financial markets. Our sense is that at this stage these developments do not pose a substantial risk to the U.S. economic outlook."
Yellen also ensured investors by saying interest rates would remain very low.
U.S. markets reacted positively to her comments, with all three main share indexes closing over one percent higher after her remarks.
The Dow Jones Industrial Average closed up almost 2-hundred points as investors welcomed Yellen's steady tone.
Ji Myung-kil, Arirang News.
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