Yellen on the Hill: Fed Head Rejects House Bill that Would Impose New Rules on Central Bank

‘Looking ahead, expect that economic activity will expand at a somewhat faster pace this year’

Yellen Rejects Move to Set up Formula for Fed (Associated Press)

Federal Reserve Chair Janet Yellen said Wednesday it would be a serious mistake for Congress to require the nation's central bank to adopt a formal policy rule to guide its decisions on setting interest rates.

Yellen faced a barrage of questions from Republican lawmakers about legislation that they are supporting to make the Fed more accountable and make its policy decisions more transparent. One of the requirements would have the Fed adopt a policy rule that would govern future decisions and would have the Government Accountability Office audit the rule.

Yellen rejected that approach and said the Fed needed the flexibility it now has to make policy decisions.

"It would be a grave mistake for the Fed to commit to conduct monetary policy according to a mathematical rule. No central bank does that," Yellen told lawmakers.

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