Federal Reserve Chair Janet Yellen says the US job market still needs help from the Fed and the central bank must remain intent on adjusting its policy to respond to unforeseen challenges.
In her first major speech on Fed policy, Yellen sought to explain the Fed’s shifting guidance on its interest-rate policy, which at times has confused or jarred investors.
She said the Fed’s policies “must respond to significant unexpected twist and turns the economy may make”.
“Thus far in the recovery and to this day, there is little question that the economy has remained far from maximum employment,” Yellen told an audience at the Economic Club of New York on Wednesday.
She said the Fed’s forecast for moderate growth has changed little since last fall despite the severe winter.
Fed officials still see only a gradual return to full employment over the next two to three years, Yellen said.
Yellen said the Fed continues to face challenges in its efforts to invigorate the economy’s recovery from the Great Recession.
It’s been reducing its bond purchases, which have been intended to keep loan rates low to stimulate spending and growth.
But the Fed has kept its benchmark short-term rate at a record low near zero since late 2008.
After taking over from Ben Bernanke on February 3, Yellen presided over her first Fed meeting on March 18-19.
At that meeting, the Fed pared its monthly bond buying by $US10 billion ($A10.72 billion) for a third time to $US55 billion.
The Fed is expected to keep reducing the purchases at each meeting this year before ending them altogether by year’s end.