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10 months ago
Fed's Yellen says "high-pressure" policy may be only way back from crisis
October 14, 2016 / 5:41 PM / 10 months ago

Fed's Yellen says "high-pressure" policy may be only way back from crisis

BOSTON, Oct 14 (Reuters) - The Federal Reserve may need to run a "high-pressure" economy in order to reverse damage from the crisis that depressed output, sidelined workers and risks becoming a permanent scar, Fed Chair Janet Yellen said in a broad review of where the recovery may still fall short.

Though not addressing interest rates or immediate policy concerns directly, Yellen's lunch address on Friday to a conference of policymakers and top academics laid out the deepening concern at the Fed that U.S. economic potential is slipping - and may need aggressive steps to rebuild it.

The question, Yellen said, is whether that damage can be undone "by temporarily running a 'high-pressure economy,' with robust aggregate demand and a tight labor market. One can certainly identify plausible ways in which this might occur." (Reporting by Howard Schneider and Svea Herbst-Bayliss; Editing by Andrea Ricci)

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