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Fed Vice Chair Speech – Challenges Confronting Monetary Policy

Vice Chair Janet L. Yellen At the 2013 National Association for Business Economics Policy Conference, Washington, D.C.
March 4, 2013 – Challenges Confronting Monetary Policy

  • “…the Federal Reserve initiated a new asset purchase program last September, extending it in December, under which the Federal Reserve is currently buying agency-guaranteed MBS at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. As with the guidance for the federal funds rate, the Committee tied the new program to labor market conditions, stating that purchases would continue until there is a substantial improvement in the outlook for the labor market in a context of price stability.21 The FOMC’s earlier large-scale asset purchase programs, in contrast, were fixed in size and carried out on a specified schedule. The Committee has also noted that, in determining the size, pace, and composition of its asset purchases, it would take appropriate account of the likely efficacy and costs of such purchases. The purpose of the new asset purchase program is to foster a stronger economic recovery, or, put differently, to help the economy attain “escape velocity.”
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