The Fed is not going to halt the quantitative easing program as the economy still requires a strong dose of stimulus. Actual unemployment and inflation are well short of the regulator’s goals. Moreover, the slowdown in the U.S. housing market, “heightened geopolitical tensions”, and financial stress in emerging markets cause a drag on the economic recovery. However, Federal Reserve Chair Janet Yellen also noted some good signs such as steady gains in household wealth and stronger growth of advanced economies with rising consumption activity. “A high degree of monetary accommodation remains warranted,” Ms. Yellen said in her testimony to the Joint Economic Committee of Congress. “Many Americans who want a job are still unemployed and inflation is below the central bank’s 2% target. While conditions in the labor market have improved appreciably, they are still far from satisfactory,” she added. It should be noted that the incumbent Fed Chairperson was known for her careful attention to unemployment when she still was Ben Bernanke’s vice chair. After she took office, Janet Yellen does not change her views closely monitoring the job market. According to the Labor Department, payrolls rose in April by 288,000 logging the biggest gain in two years, and the jobless rate was the lowest since September 2008. Meanwhile, the U.S. unemployment rate stood at 6.3% in April whereas the March reading showed 6.7%. Janet Yellen called the jobless rate in April “elevated.” She highlighted that the share of the labor force that has been unemployed for more than six months as well as part-time employees who would prefer full-time work “is at historically high levels.”
