Ms. Yellen stuck to an equivocal line she used in July in testimony to Congress. If the job market continues to improve more rapidly than expected or inflation rises quickly to the Fed's 2% goal, the Fed could raise rates sooner than expected. But if progress stalls, low rates will persist.
She delivers her comments amid a deepening debate at the U.S. central bank about when to start raising short-term interest rates from near zero, where they have been since December 2008. Many Fed officials don't expect to move rates until mid-2015, but a falling jobless rate and other indicators of improving job markets has led some officials to press for earlier moves.
Labor indicators "have improved more rapidly than the (Fed) had anticipated," Ms. Yellen acknowledged. However her comments made clear that she isn't ready to move, in part because she is grappling for answers to questions about puzzling labor markets scrambled by the 2008 financial crisis.
"There is no simple recipe for appropriate policy in this context," Ms. Yellen said. "Monetary policy ultimately must be conducted in a pragmatic manner that relies not on any particular indicator or model, but instead reflects an ongoing assessment of a wide range of information in the context of our ever-evolving understanding of the economy."
Judging the degree of slack in the economy is particularly hard right now, she argued, because of shifts in labor force participation, part-time employment, the demographics of the workforce, wage growth and broader measures of labor market dynamism. "A considerable body of research suggests that the behavior of these and other labor market variables has changed since the Great Recession," she said, complicating her decisions.
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