Janet Yellen must be wondering why she ever agreed to take this job.
In her first congressional testimony today as Fed chairwoman, I witnessed one representative badger Janet Yellen to give a precise definition of how many hours per week qualify as a "part-time" job. A bewildered Yellen replied that those definitions came from the Bureau of Labor Statistics - not the Fed - but the details don't particularly matter in a hazing ritual.
I would rank "Fed chairwoman" near the top of the list of truly thankless jobs - above even garbage man or bail bondsman.
You're constantly accused of being a stooge for Wall Street banks … even though the Wall Street banks hate you and consider you a stooge for the president and Treasury.
You're always either "unfairly" punishing savers with low yields or punishing borrowers with high yields.
You're either inflating a bubble … or being accused of popping one.
You're a perpetual scapegoat for whatever ails the economy - too much inflation, not enough inflation, too much unemployment, etc. - and a punching bag for every populist politician, Democrat or Republican, looking to make a name for themselves.
So, with all of that said, how did Janet Yellen do in her first pass through the gauntlet?
Janet Yellen: Tuesday's Testimony
She looked a little rattled and out of her league throughout - I expect that a stiff drink might be in her near future - but the good news is that with respect to policy outlook, she stood her ground and gave us no unexpected surprises. There would be "continuity" with Ben Bernanke's policies, and Yellen made it clear that she herself had helped to form them.
According to Yellen, the labor market is still very weak, and tapering of Ben Bernanke's quantitative easing program would happen "in measured steps." Janet Yellen emphasized that she is "considering more than the unemployment rate when evaluating the condition of the U.S. labor market," and specifically mentioned long-term unemployment and underemployment as factors that concerned her, which Wall Street views as confirmation that short-term rates will remain at or near zero for the foreseeable future.
And in reassuring words that Wall Street wanted to hear, Janet Yellen reiterated Bernanke's statements that quantitative easing and its continued tapering are not on a "preset course." The market took this to mean that a slowdown - or even a reversal - of the $10-billion-per-month tapering was entirely possible if job growth doesn't start to materialize. (In subsequent meetings, the Fed has reduced its bond purchases from $85 billion per month to $65 billion per month.)
Yellen also acknowledged the volatility coming out of emerging markets but doesn't currently see it as a fundamental risk to the U.S. economy.
What are we to take away from all of this?
The Fed probably will taper by another $10 billion in March. But if we get another month of disappointing job growth, that is by no means certain. But the most important takeaway here is that investors will not have to worry about fighting the Fed any time soon.
Janet Yellen paid lip service to the Fed's dual mandate of maintaining both low unemployment and low inflation, hinting that with inflation still very low she had a lot of wiggle room to err on the side of dovishness.
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