WASHINGTON - The economy and job market are improving but borrowing rates are expected to remain low for the foreseeable future, the Federal Reserve announced today.
And even though unemployment is down to 6.3 percent and "conditions have improved appreciably," there will be no major changes in Obama administration fiscal policies, Fed chairwoman Janet Yellen told Congress today.
"Even with its recent declines, the unemployment rate continues to be elevated," she told members of the Joint Economic Committee. "Moreover, both the share of the labor force that has been unemployed for more than six months and the number of individuals who work part time but would prefer a full-time job are at historically high levels."
Yellen also pointed to slow growth in worker wages and a flattening in the housing market as reasons for staying the course. Borrowing rates have remained at record lows, near zero, for over six years.
But the chairwoman indicated that, as expected, the Obama administration is gradually pulling back some measures implemented to counter the recession, including the cessation of its bond buying program later this year. Responding to questions on the Fed's exit strategy from committee chairman Rep. Kevin Brady, R-Texas, Yellen indicated the program would end by fall.
"We have indicated that as long as we continue to see improvements in the labor market and we believe the outlook is for continued progress and as long as we continue to believe and see evidence that inflation will move back up over time to our 2 percent [inflation] longer run objective, we anticipate continuing to reduce the pace of our asset purchases in measured steps," she said.
Yellen said it will be a "considerable time" after that when the reserve would consider normalizing borrowing rates. The Fed has been purchasing the assets in an effort to keep rates low: The central bank approved reducing its monthly purchases last week by $10 billion down to $45 billion. It is the fourth reduction from the original $85 billion.
Today marked Yellen's first testimony on Capitol Hill since assuming office in February. She is scheduled to return Thursday to speak before the Senate Budget Committee.
The Associated Press contributed to this report.