The May jobs report that showed only 38,000 new jobs was “disappointing,” Federal Reserve chairwoman Janet Yellen said Monday.
Yellen weighed in on the jobs report and the overall economy in a speech delivered in Philadelphia, calling the most recent jobs report concerning. She said, however, that “one should never attach too much significance to any single monthly report,” and that other jobs indicators have been strong.
Yellen’s comments are among the last from Fed officials before their highly anticipated June monetary policy meeting. Although the weak jobs report led many investors to speculate that the Fed will not raise interest rates and tighten monetary policy at the meeting, Yellen suggested on Monday that she hasn’t changed her mind about the overall strength of the U.S. economy.
“I continue to believe that it will be appropriate to gradually reduce” monetary stimulus, Yellen said.
When members of the Fed gather in Washington on June 14 and 15 to set monetary policy, Yellen suggested, one of the major questions they will weigh is whether the slower job growth in the past two months is a “harbinger of a persistent slowdown in the broader economy.” Other economic uncertainties they will considere are the upcoming United Kingdom referendum on whether to leave the European Union, and whether inflation is likely to head up toward the Fed’s 2 percent target.
But Yellen clarified that there is no definite plan for what the Fed might do, as much as investors may want more clarity. “There is, as I said about 18 times, no preset plan,” she said, also adding that “we constantly have to be reacting to new data.”
Yellen also downplayed the idea that there are “normal” interest rates that the Fed should be implementing, rather than the ultra-low interest rates of the past eight years.
“That’s not some independent goal of monetary policy,” Yellen said of “normal” interest rates, arguing that the level of rates is determined by a host of factors and that the market may require low interest rates for years. While she does believe that interest rates will rise over time, she cautioned that “that is something we’re uncertain about and have to find out about over time.”
