In Praise of Janet Yellen

Her statement today, in which she mentioned that the Federal Reserve would watch to see how the employment market was doing before raising interest rates, is welcome news for just about anyone who is still concerned that the economic recovery is not on firm footing, and who believes that the job market still has a ways to go before we can be sanguine about the employment picture. Incidentally, I don’t read Yellen’s comments as being an indication that interest rates will rise soon. Rather, I read them as a preemptive strike against those who would increase interest rates well before they need to be raised.

And that preemptive strike is entirely justified. Again–and I have written this before–there is no current threat of inflation, there is a great deal of catch-up that needs to be played in the labor market, and factors like the weather can still cause the economy to contract. I don’t know who in this environment believes that interest rates actually need to go up in the near future, but I do know that I wouldn’t want to take investment advice from those people. Ever.

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