Your Economy (No Politics)

[Bullwinkle]

Yellen: Market turmoil adds to risk for economy
Monday September 10, 11:09 am ET


SAN FRANCISCO (Reuters) - San Francisco Federal Reserve Bank President Janet Yellen said on Monday that current financial market turmoil has added "appreciably" to downside risks for the U.S. economy.

Still, Yellen said that the goals of price stability and full employment must be the "unswerving focus" of policy-makers.

"Monetary policy should not be used to shield investors from losses," Yellen said in remarks prepared for delivery at the National Association of Business Economics annual meeting.

Yellen is not a voting member of the central bank's Federal Open Market Committee in 2007.

She said that declining home prices could hurt consumer spending, and that risks to economic growth would be "significant" if housing prices fall in the context of rising unemployment.

The Fed's actions to shore up the credit markets so far have been "helpful" but not a panacea, Yellen said.

Ultimately, the bank must consider the role of policy lags in making any adjustment, she said. "It is critical to take a forward-looking approach."

http://biz.yahoo.com/rb/070910/usa_fed_yellen.html?.v=3