Ms. Yellen said she strongly opposes legislation to audit the Fed if it allows Congress to scrutinize and pressure the central bank’s internal deliberations over interest rates and monetary policy. Sen. Rand Paul, Kentucky Republican, is pushing a bill that would give congressional watchdogs authority to audit such internal deliberations, and is demanding a vote on the bill as the price of allowing the Senate to vote on Ms. Yellen’s nomination to become the Fed’s next chairman in January.
“I would object to legislation that would subject the Fed to short-term pressures that would affect its independence,” she told the Senate Banking Committee. It was her first appearance before Congress since President Obama last month nominated her to replace current Chairman Ben S. Bernanke, who is scheduled to depart Jan. 30.
“We’re one of the most transparent central banks in the world,” she said. “But I would not support anything that diminishes [the Fed‘s] independence. … For 50 years, Congress has recognized that there should be an exception to the [General Accountability Office‘s] ability to audit” federal agencies when it comes to the Fed’s highly sensitive monetary deliberations, which are closely followed and regularly move financial markets all over the world, she said.
Longtime Fed-watchers said Ms. Yellen’s poised performance made the hearing a resounding success for the nominee to what some have called the second-most powerful office in the world.
Ms. Yellen stressed repeatedly that she sees the Fed’s priority as nurturing the fragile economic recovery with ultra-easy monetary policies and near-zero interest rates until the economy and labor market show enough vigor to keep recovering on their own.
“I consider it imperative that we do what we can to promote a very strong recovery,” she said. “We can’t have normal rates unless the economy is normal.”