Feedback
Business

Fed Chair Janet Yellen ‘Very Hopeful’ for Economic Growth

Fed Chair Janet Yellen rejected the notion that the Fed has a "third pillar" of policy to keep stock market prices afloat.

On the second day of her semiannual congressional testimony Wednesday, Yellen was asked by Rep. Edward R. Royce, R-Calif., whether the U.S. central bank's monetary policy is tied to boosting Wall Street's equity values — in effect a "third pillar" to go along with the Fed's dual mandate of full employment and price stability.

"We do not target the level of stock prices," she said. "That is not an appropriate thing to do."

Read More from CNBC: Brexit Was a Factor in Monetary Policy Decision, Janet Yellen Says

The Fed has enacted three rounds of so-called quantitative easing, a monthly bond buying program that has seen its balance sheet soar to $4.5 trillion. The last round of QE ended in October 2014. Each round has seen a sharp rise in the stock market.

Fed. Chair Yellen: Raising Rate is 'The End of an Extraordinary 7 Year Period' 1:51

Though the Fed is out of the easing business for now, it has kept its interest rate target close to zero, hiking just once in the last 10 years. Each signal that the Fed is about to tighten policy has resulted in market volatility, prompting Royce to ask whether the central bank will be cowed by jangled nerves on Wall Street.

"We're going to look at what the trajectory is for the economy, for the goals Congress has assigned us, namely inflation and maximum employment, and take policies we think are appropriate to foster them," Yellen said.

However, Rep. Scott Garrett, R-N.J., charged that the Fed's policies have been targeted toward helping "the rich over the poor" by implementing policies that boost the market, where most of the value is held by the wealthiest people. He did not give Yellen a chance to respond.

In other matters, Yellen said she believes the recent weakness in job creation is "transitory" and does not reflect an otherwise growing economy.

Read More from CNBC: Fed's Yellen Says Cautious Approach Still Appropriate Amid Uneven Growth

The central bank chief sounded more optimistic than she has over the past couple of weeks, a time during which the Fed backtracked on what had been an aggressive path forward for interest rates.

"We are seeing a pickup in growth. There's been a sharp increase in consumer spending," Yellen told the House Financial Services Committee. "I'm very hopeful that we will see a pickup in growth. We will be watching for that as we assess the economy."

Yellen spoke a week after the Federal Open Market Committee slashed its expectations for future rate hikes. That decision in turn followed a much weaker-than-expected May jobs report, which showed that nonfarm payrolls increased by just 38,000.