SANTA BARBARA, California -- The U.S. Federal Reserve has not decided on the sequence of measures it will use to pull back its extensive support for the U.S. economy when the time comes to do so, and that time is not close at hand, San Francisco Fed President Janet Yellen said on Tuesday.
"We have used the language of an extended period," Yellen told reporters after a Fed conference.
"This is not something I anticipate happening over the next several months. Certainly not," she said.
Recent Fed testing of reverse repurchase agreements with financial firms that deal directly with the central bank has been aimed at ensuring the Fed's tools all work, Yellen said.
"I'm not sure it's necessary at this point to have decided on exactly what the sequence will be when the time comes," she said.
Discussing concerns about the declining value of the U.S. dollar relative to other currencies amid worries about the yawning U.S. budget deficit and rising public debt, Yellen said imbalances in trade and capital are a vulnerability in the global economy. If the United States and Asian countries address the causes of those imbalances, it could increase confidence in the value of the dollar, she said.
When the United States economy recovers from the crisis, budget deficits will shrink, but deficits will remain due to commitments to fund retirement and health care programs.
The United States must address this problem, and Asian economies must move to greater reliance on domestic demand as a driver of growth, she said.
"If we follow that action plan, that is a recipe for a value of dollar that people will have confidence in because it will rest on appropriate and solid macroeconomic policies," she said.
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