Fed's Yellen: central bank's policy "no panacea"

Reuters

NEW YORK (Reuters) - The U.S. central bank's policy is "hardly a panacea" for weak U.S. growth and more near-term fiscal stimulus could be a helpful complement, Federal Reserve Vice Chair Janet Yellen said on Wednesday.

Yellen said she "strongly supported" the Fed's controversial decision this month to purchase $600 billion in long-term U.S. government debt.

Continue Reading Below

"I believe it will be helpful in strengthening the recovery. But it is hardly a panacea," she said.

"Thus a fiscal program that combines a focus on pro-growth policies in the near term with concrete steps to reduce longer-term budget deficits could be a valuable complement to our efforts."

Yellen also defended the Fed against critics abroad, who have complained the U.S. central bank is deliberately pushing down the value of the dollar to the detriment of other economies.

She said the Fed's policy should provide support for the global economy to spur economic growth in the United States and lessen risks to the recovery.

She said the bond buying aimed to lower longer-term interest rates to promote faster economic growth. While in some ways unconventional, she said, the policy "is actually quite similar to the Fed's traditional approach to monetary policy."

(Reporting by Kristina Cooke and Jonathan Spicer; Editing by Padraic Cassidy)