Federal Reserve Chairwoman Janet Yellen testified Wednesday that the U.S. economy was near normal, defying Republicans worried both that the economy is weak and that the Federal Reserve is still employing unusual emergency monetary stimulus.
“The economy is in many ways close to normal,” she said during a hearing held by the House Financial Services Committee.
Yellen was responding to a question posed by Rep. Mick Mulvaney, R-S.C., who pressed her to explain the Fed’s recent unconventional monetary policies in light of the fact that she sees the economy as near normal.
While the economy is close to normal in terms of unemployment rate, Yellen explained, it is not normal in the sense that “the economy is being held back by headwinds” that are pushing down the market level of interest rates. To keep up growth, the Fed has had to keep rates ultra-low.
That answer was not appreciated by Republicans.
To start the hearing, committee Chairman Jeb Hensarling, R-Texas, criticized President Obama’s “economic victory lap” for being out of touch with the American people and told Yellen, “I hope you don’t follow suit this morning.”
