WASHINGTON -- Federal Reserve Chair Janet Yellen faced tough questioning from House Republicans Wednesday over the role the Fed has played in helping the economy to recover from the Great Recession.
On her second day of testimony on Capitol Hill, she told the House Financial Services Committee that the Fed’s policies had largely accomplished its objectives “to spur spending in the economy and restore low unemployment.”
But GOP lawmakers told Yellen that the Fed’s ultra-low interest rates and massive bond buying had left the economy growing at the slowest pace for any economic recovery in the post-war period.
Rep. Jeb Hensarling, the Texas Republican who chairs the committee, told her that the Fed has not “found the proper balance” between growth and regulation. An advocate for giving Congress an oversight role over the central bank, he criticized Yellen’s Fed for lack of “predictability and transparency.”
Rep. Maxine Waters of California, the highest ranking Democrat on the panel, defended the Fed’s independence and asked, “Do the Republicans not remember … the 10 percent unemployment,” the peak following the financial crisis.
Democrats countered that the Fed’s policies had succeeded in creating nearly 16 million jobs and pushing the unemployment rate down to 4.8 percent, compared to the 10 percent jobless peak caused by the recession.
Yellen told the panel that the Fed is close to achieving the two goals it has been given by Congress -- promoting maximum employment and stable inflation. Nevertheless, she did concede that “economic growth has been quite disappointing.”
The U.S. gross domestic product growth in recent years has averaged around 2 percent annually.