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From NPR News, this is ALL THINGS CONSIDERED. I'm Audie Cornish.
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And I'm Robert Siegel. Twice a year the head of the Federal Reserve is required to report to Congress on how the U.S. economy is doing, and for the last several years the people who listen in on this testimony have strained their ears for any hint of whether interest rates might be going up. Well, today, more straining, but Fed Chair Janet Yellen told the Senate Banking Committee that despite some recent brightening in the economy, the benchmark rate won't be going up anytime soon. Here is NPR economics correspondent John Ydstie.
JOHN YDSTIE, BYLINE: Fed policymakers have held the federal funds rate near zero since 2008, trying to spur economic growth. And Yellen said progress has been made. She noted that over the past six months, job growth has averaged 230,000 a month. And she said the economy is making progress towards the Fed's goals of full employment and inflation of around 2 percent. But, she said, it's still too soon to begin raising rates.
JANET YELLEN: We need to be careful to make sure that the economy is on a solid trajectory before we consider raising interest rates.
YDSTIE: Yellen reminded lawmakers that the economy has had several false starts when many were convinced it was picking up steam, only to see it slow again. Still, senators like Republican Mike Crapo of Idaho pressed Yellen for a date when the Fed might move.
SENATOR MIKE CRAPO: When do you currently anticipate this first rate hike to occur?
YDSTIE: Yellen said Fed officials have not agreed on a time frame, however, she pointed to forecasts made by Fed policymakers that show most expect rates to start rising sometime in 2015. New York Democrat Charles Schumer counseled Yellen not to move too fast.
CONGRESSMAN CHARLES SCHUMER: To me, the greatest problem this country still faces is lack of good paying jobs, decline of middle-class incomes.
YELLEN: I certainly agree and tried to emphasize that while we're making progress in the labor market, we haven't achieved our goal.
YDSTIE: After all, Yellen said, unemployment remains elevated at 6.1 percent, and some of the unemployed continue to drop out of the workforce because they can't find jobs. While Schumer and other Democrats urged Yellen to keep rates low, Tom Coburn of Oklahoma represented the Republican view that extremely low rates are dangerous and are starting to create bubbles in financial markets.
SENATOR TOM COBURN: Zero interest rate policy is tending to make people reach for a yield now and is an impetus toward bubble creation in certain asset classes.
YELLEN: Well, it can be, and that's why we're watching very carefully.
YDSTIE: But, Yellen said, raising interest rates is not the answer because that could stall the recovery. In fact, the Fed is doing more than just watching for bubbles. Yellen used her testimony today to highlight concerns the Fed has that some smaller firms in the social media and biotech sectors are overvalued. That took the wind out of a morning rally in the stock market, particularly on the NASDAQ exchange where tech stocks are concentrated. Yellen did reiterate that so far the Fed doesn't see a bubble in the broader financial markets. John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.