Janet Yellen, confirmed this week by the Senate to succeed Ben Bernanke as Federal Reserve chairman, said in an interview with Time magazine that the economy in the United States will accelerate this year and more employment opportunities may follow. "I think we'll see stronger growth this year," Yellen said. "Most of my colleagues on the Fed's policymaking committee and I are hopeful that the first digit [of gross domestic product] could be three rather than two." She added that the recovery had been "frustratingly slow, but we're making progress in getting people back to work, and I anticipate that inflation will move back towards our longer-run goal of 2 per cent". Yellen, 67, was confirmed by the Senate on Monday to replace Bernanke and will be the first woman to head the US central bank. She will preside over an unwinding of the Fed's unprecedented stimulus programme if the economy performs as forecast. The Fed took the first step towards the exit last month when it announced plans to reduce the monthly pace of asset purchases to US$75 billion from US$85 billion, citing evidence of improvement in the labour market. Our [asset purchases are] aimed at holding down long-term interest rates JANET YELLEN In the Time interview, Yellen pushed back at suggestions that the asset purchases were "just helping the rich". "It's not true," she said. "Our policy is aimed at holding down long-term interest rates, which supports the recovery by encouraging spending." Part of the stimulus "comes through higher house and stock prices, which causes people with homes and stocks to spend more, which causes jobs to be created throughout the economy and income to go up through the economy", she said. Yellen said her first priority, when she replaces Bernanke after his term ends at the end of this month, was reducing joblessness. Applications for US unemployment benefits fell last week to the lowest in a month as improvements in the economy prompted employers to retain workers. Jobless claims declined by 15,000 to 330,000, the Labour Department reported in Washington yesterday. "I'd like to see real wages going up," Yellen said. On banking regulation, she called the 2010 Dodd-Frank Act "a good roadmap" that "lays out most of the steps that are necessary. But we may also need to take some further steps that have not been taken yet".
