US Federal Reserve Chair Janet Yellen said the central bank’s task has shifted from a post-crisis exercise of healing the economy to one aimed at holding on to progress made.
“Before, we had to press down on the gas pedal trying to give the economy all of the oomph that we possibly could,” Yellen said on Monday in Ann Arbor, Michigan.
The Fed is now trying to “give it some gas, but not so much that we’re pushing down hard on the accelerator,” she said.
Yellen and her colleagues are aiming to ease back significantly this year on the level of support the central bank is providing the US economy, as they close in on their goals of full employment and 2 percent inflation.
Policymakers have penciled in two additional rate hikes this year, on top of one executed last month.
Minutes of their meeting showed that most Fed officials also expect to begin shrinking the bank’s US$4.5 trillion balance sheet later this year, gradually reversing emergency bond purchases made during the recession and recovery.
“The appropriate stance of policy now is closer to, let me call it neutral,” Yellen said in response to questions during an event at the University of Michigan’s Gerald R. Ford School of Public Policy.
Yellen said she expected the economy to continue to grow at a moderate pace and that gradual interest-rate increases “can get us where we need to be.”
Yellen, whose term as chair ends early next year, said it is as important to avoid moving rates too slowly as it to avoid moving too rapidly.
“We want to be ahead of the curve and not behind it,” she said. “We don’t want to be in a position where we have to raise rates rapidly, which could conceivably cause a recession.”
Yellen said unemployment, at 4.5 percent, now stands a bit below what she and many of her colleagues consider to be its lowest sustainable rate.
Inflation, she said, was still slightly below target, emphasizing her focus on the measure that excludes food and energy.
“It’s still slightly below 2 percent in my estimation,” she said.
The Fed’s preferred gauge of inflation rose to 2.1 percent in the 12 months through February, the first time it has reached the central bank’s 2 percent target in almost five years.
However, the so-called core version of that measure showed price rises have been fairly steady at between 1.6 percent and 1.8 percent for much of this year.
In about 75 minutes of questions and answers from students and Ford school dean Susan Collins, Yellen reiterated several previously stated positions.
She said demographic changes and low productivity growth are holding back the US economy, and that tougher bank supervision has made the US financial system safer, and that some proposed legislation in Congress threatens the independence of the US central bank.
NOTABLE SHIFT: By 2030, 50% of all laptops would be assembled in Southeast Asia, while Taiwan would still mostly focus on research and development, a report said Global laptop and desktop computer supply chains are expected to shift significantly away from China in the next 10 years, a Market Intelligence & Consulting Institute (MIC, 產業情報研究所) report said. By 2030, only 40 percent of global laptop production would remain in China, said the report, which was released on Thursday. “The reshuffling of the global supply chain will be one of the most important trends in the next 10 years,” the institute said in the report. “In the long run, key component makers will follow laptop assemblers in moving out of China.” The Taipei-based institute predicted most key component makers
Merck Group Taiwan yesterday said that it plans to invest substantially on expanding its fab in Kaohsiung’s Lujhu District (路竹) to better serve its local customers, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電). The company said it plans to expand its production space by 50 percent in the next five years and its workforce by about 40 percent, Merck Group Taiwan managing director Dick Hsieh (謝志宏) told a media briefing in Taipei. Hsieh declined to disclose investment details, but said that the latest investment would exceed the total amount Merck has invested in Taiwan over the past few years. Those investments would be
Yageo Corp (國巨), the world’s third-largest supplier of multilayer ceramic capacitors, has formed a strategic alliance with Hon Hai Precision Industry Co (鴻海精密) to develop key electronic components for electric vehicles and digital healthcare, it said yesterday. The alliance is to help Yageo boost its revenue from high-end components for vehicles and industrial, medical and aerospace devices, as well as those used in 5G and Internet-of-Things devices, the company said. The companies signed the strategic alliance agreement at Yageo’s headquarters in New Taipei City’s Sindian District (新店). Their cooperation is to start this quarter, the companies said in a joint statement. “Through the cooperation
INVEST IN TAIWAN: A metal components casting firm and the world’s largest maker of aluminum bicycle rims also obtained approvals to join the program Solar Applied Materials Technology Co (SOLAR, 光洋應用材料), a part of Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) “green supply chain,” has pledged to invest NT$1 billion (US$34.1 million) to build a new plant at the Tainan Technology Industrial Park (台南科技工業區), the Ministry of Economic Affairs said yesterday. SOLAR has been collaborating with TSMC to extract precious metals from waste and reuse them as “sputtering target” material in high-end semiconductor manufacturing, a TSMC press release issued in May said. Established in 1978, SOLAR also offers key materials and integrated services to customers in the optoelectronics, information and communications technology, petrochemicals and consumer electronics industries,