WASHINGTON -- Federal Reserve Chair Janet Yellen came under fire Wednesday from House Republicans who charged that the central bank's politics to promote low interest rate have not boosted economic growth and have left financial markets confused about its next moves.
House Financial Services Committee Chairman Jeb Hensarling, R-Texas, said that the Fed and the Obama administration have failed to produce the kind of economic policies needed to fuel the strong growth the country has needed over the past seven years in the wake of the 2007-2009 recession.
"What is clear and verifiable is that this weak economy doesn't work for millions of working Americans," Hensarling told Yellen. "The Fed has been the facilitator and accommodator of the administration's disastrous national debt policy and has regrettably lent its shrinking credibility to advancing the administration's social agenda."
While Republicans on the committee joined in Hensarling's criticism, Democrats sought to defend Yellen. They noted that the unemployment rate has fallen from 10 per cent to 4.7 per cent, and 14 million jobs have been created despite modest overall growth.
Yellen said the Fed has used the tools it has available to keep interest rates low as a way to bolster job creation.
Testifying for a second day before Congress, Yellen reiterated that the Fed plans to be very cautious in raising interest rates. She said the economy faces a mixed picture, with growth restrained by lacklustre investment spending but bolstered by a solid rebound in consumer spending.
Yellen said she was "very hopeful" that job growth, which slowed sharply in April and May, will rebound in coming months.
"There are some headwinds but we do have strengths. Consumer spending is particularly strong," Yellen said. "I don't want to send a message of pessimism about the economy and where we are going."
The Fed left a key interest rate unchanged at a low level of 0.25 per cent to 0.5 per cent at its meeting last week, the fourth time it has passed up a chance to raise rates after nudging rates up by a quarter-point last December.
