Federal Reserve Chairwoman Janet Yellen thinks its "unwise" to wait very long on hiking interest rates. She also cautioned that economic uncertainty under Trump is, well, all but certain.
Yellen indicated a rate hike was on the table for March when she testified Tuesday before a Senate committee on her semiannual report on monetary policy and the U.S. economic outlook. Here's the report.
In her Valentine's Day testimony, Yellen zoomed in on wage growth, productivity and income disparity, beyond interest rates.
The chairwoman said that while wage growth has picked up and the labor market is healthy, weak productivity growth in the U.S. has kept it low. That said, she believes raising rates shows the economy is on the mend.
This is the first time she's testified since President Trump took office. She said the U.S. central bank is aware of the sharp policy changes the administration looks to make.
Question for Yellen on whether Trump econ plans may change Fed outlook. Yellen says not enough clarity on stimulus. Not going to speculate.— Paul R. La Monica (@LaMonicaBuzz) February 14, 2017
However, she said it's too early to tell how Trump's policies may impact Fed decisions.
Yup. Keep hearing it in on earnings calls: On balance, "positive" tax policies will outweigh all else.— Dan Primack (@danprimack) February 14, 2017
Regardless of policy, we are reminded that tax reform is a long process.
Yellen agrees with Pres. Trump on his core principles of reg. reform, & on reducing regs. Less so on need for fiscal stimulus— Steve Liesman (@steveliesman) February 14, 2017
Though not always on the same page, Trump and Yellen do have some commonalities.
'Very impressive,' Warren says of Yellen's first reply, re lending being strong despite Trump's protests about Dodd-Frank.— Steve Goldstein (@MKTWgoldstein) February 14, 2017
Senator Elizabeth Warren (D-MA) brought up Trump's call to claw back bank regulations.
Automation and jobs of the future
Sen. Heidi Heitkamp (D-ND) called for a conversation on the future of work given the rise of automation and globalization. Yellen responded that while these have generally been a source of growth, they have "created huge disadvantages" for some people.
She specifically mentioned people with less education and in manufacturing jobs that have seen their work outsourced, and urged lawmakers to think about ways to address the needs of those workers.
Diversity in the labor market
Somewhat piggybacking on the need of setting workers up for the future, Sen. Tim Scott (R-SC) brought up the disparities that still exist in labor participation between minorities and white Americans.
Yellen has said that it's "disturbing that such disparities still exist" and responded saying that there is a great need for policy and discussion on lifting these groups up.
Here is a quick look at the broader labor statistics Sen. Scott referred to.
'Immigration helps the economy'
Chairwoman Yellen also answered questions on immigration and how it impacts the overall economy. While she declined to discuss specifically Trump's recent controversial executive order on immigration, she did say that generally speaking, immigration is good for the economy.
"Immigration has been an important source of labor force growth," she said.
After Yellen:— Adam Samson (@adamsamson) February 14, 2017
Treasury yields up
Financial stocks up
Here's what the early market reaction to her testimony looked like this morning.
Yellen says during her testimony that she intends to serve her full term as Fed chair. It ends in early 2018. But will she get another term?— Paul R. La Monica (@LaMonicaBuzz) February 14, 2017
That is the question. (This is, for the record, the second time she's said she is staying put.)
WATCH | What happens when the two people that can help propel America's economy forward aren't fully on the same page.