THE JANET EFFECT

Here's more on the Fed's new leader and her outlook.

Live blog and video of Janet Yellen’s testimony before a Senate panel

February 27, 2014, 9:53 AM

Federal Reserve Chairwoman Janet Yellen will be heading to the Senate Banking Committee Thursday. Like recent economic data, her previously scheduled appearance was cancelled due to snow. Follow along as MarketWatch’s Greg Robb live blogs her testimony.

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• • 8:05 am
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  • by Greg Robb
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  Yellen echoes comments made earlier this week by Fed Governor Daniel Tarullo that there are a “few” areas where asset valuations appear stretched.

  She offered the price of farmland as her only example.

  In a speech on Tuesday, Tarullo mentioned farmland, but also added  ”the equity prices of some small technology firms” as an area of concern.

  
  
• • 7:59 am
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  • by Greg Robb
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  Yellen added a little bit more to her comments on the weather and the data. She said it would take a “significant change” in the outlook for the Fed to pull back from its gradual reduction in monthly asset purchases.

  The Fed just need to get a “handle” on how much of the disappointing data stems from the cold winter, she said.
• • 7:51 am
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  • by Greg Robb
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  More signs that Yellen is open to moving away from having a specific unemployment rate threshold for the first rate hike.

  When the unemployment rate was high, it was useful to have a 6.5% threshold because it meant that the Fed would not hike rates, Yellen said.

  But as the unemployment rate falls below that threshold, the Fed will need to look more broadly to decide when the labor market is healthy enough for the Fed to tighten.

  “Of course, the unemployment rate is not a sufficient statistic to measure the health of the labor market,”  Yellen said.

  She noted the high level of long-term unemployed.

  “As we go to a fuller consideration of how the labor market is performing, we need to take all of those things into account,” she added.

  The unemployment rate hit 6.6% in January.

  
  
• • 7:43 am
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  • by Greg Robb
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  Yellen urges Congress to “do no harm” the economy with fiscal policy.
• • 7:41 am
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  So far, questions from the Senate panel have been low-key and of the softball variety. 
• • 7:26 am
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  • by Greg Robb
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  “In the weeks and months ahead, my colleagues and I will be attentive to signals that indicate whether the recovery is progressing in line with our earlier expectations,” Yellen said.

  By saying “months ahead” it looks like Yellen is pointing past the next Fed policy meeting on March 18-19.