Despite record drops in home prices and mounting evidence of a recession, San Francisco Federal Reserve Bank President Janet L. Yellen called recent Fed efforts “sufficient to promote moderate growth.”
The remarks, made Tuesday morning to the Financial Planning Association of Northern California, a division of the Denver-based FPA, came just hours after the release of the Standard & Poor’s/Case-Shiller index of house prices showing a record drop of 14.1% in housing prices in the first quarter.
Ms. Yellen tempered her remarks by stating: “The risks surrounding my forecast are large because of uncertainty about how these three factors — the financial turmoil, the housing cycle and commodity prices — will evolve.”
The central bank has cut its key fed funds interest rate three times this year to 2%, and she was careful to note that the funds rate minus the inflation rate was “an accommodative level of around zero.”
Ms. Yellen also emphasized that although data on inflation remain grim, “matters looked far worse 30 years ago than they do now.”
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