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Federal Reserve Bank of San Francisco President Janet Yellen doesn't agree with Fed head Bernanke on the chances of an economic recovery starting before 2010.
Yellen told the Forecasters Club of New York, "I share the guarded optimism of most professional forecasters that the economy may begin to grow within the next several quarters. But I must admit that I see considerable downside risk, and my confidence in this outlook is greatly diminished by the nearly unprecedented set of circumstances we face."
Those words don't exactly encourage a great deal of optimism, do they?
The Fed member noted that she understands the concerns about inflation, but doesn't think that the Fed needs to stray from its current path. Yellen did state that the Fed needs "to be careful not to minimize the threat of deflation," which she is worried about.
Yellen added that the recent lower interest rates have had an "adverse impact on bank profitability," perhaps contributing to the tenuous banking situation. However, she heaped praise on the Treasury Department's attempts to get rid of toxic assets on bank balance sheets.
When asked about People's Bank of China Governor Zhou Xiaochuan's plan for a new global reserve currency, Yellen noted that China is "one of our most important creditors" and the country's concern about the health of the dollar is "understandable."
Finally, Yellen told the assembled group that the unemployment rate will remain "elevated" until 2011, adding that she wouldn't "call this a particularly rosy scenario."
Yellen added that the recent lower interest rates have had an "adverse impact on bank profitability," perhaps contributing to the tenuous banking situation. However, she heaped praise on the Treasury Department's attempts to get rid of toxic assets on bank balance sheets.
When asked about People's Bank of China Governor Zhou Xiaochuan's plan for a new global reserve currency, Yellen noted that China is "one of our most important creditors" and the country's concern about the health of the dollar is "understandable."
Finally, Yellen told the assembled group that the unemployment rate will remain "elevated" until 2011, adding that she wouldn't "call this a particularly rosy scenario."
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