Federal Reserve Chair Janet Yellen says the slow recovery from the Great Recession has surprised economists, confounding long-held beliefs about growth and inflation. Her remarks at an economic conference may help explain why the Fed has been reluctant to raise US interest rates.
Yellen did not address the Fed’s timetable for rates. The central bank is widely expected to resume raising rates in December.
She says the aftermath of the crisis has “revealed limits in economists’ understanding of the economy.” For example, tumbling home prices reduced consumers’ willingness to spend more than economists had envisioned. And a steady decline in the unemployment rate has failed to lift wages and inflation as much as expected.
In December, the Fed raised rates from near zero, where they had remained for seven years.