bank rates

Is Janet Yellen Any Better Than Bernanke?

Poll QuestionWell, we’ve now heard Janet Yellen offer her take on the economy. She testified last week for the first time before Congress as Federal Reserve Chair.

Were you listening? We were.

She talked a lot about the Fed’s ongoing efforts to influence interest rates.

But it took a string of questions from U.S. Rep. Dennis Ross, R-Fla., before she talked about how those efforts have impacted savers.

Here’s what she said when Ross asked what his senior citizen constituents could expect with regard to the return on their savings accounts and certificates of deposit.

“Our objective is to get the economy moving and into a state of full recovery as rapidly as we can. And when we’ve accomplished that, rates of return will come back to more normal levels, and you’ll see higher returns.”

Ross pressed on, noting that low rates may push not only seniors but all investors — including families saving for college tuition — into riskier options.

Yellen’s response:

“Interest rates are low, and they’re low not just because the Fed arbitrarily decided to set them at a low rate, but because the fundamentals of the economy are generating low interest rates. Normally we think of interest rates as reflecting the balance between savings and investment, the strength of those forces in the economy. In the aftermath of the downturn, the desire to borrow money for private investment is weak, and reflection of that is low rates.

“If we were to try to keep interest rates above the levels called for by fundamentals, we would have a yet weaker economy, it would be harder to get a job, and the children and grandchildren of those retirees would be coming home, even more than they already are, to live with their parents and grandparents, because they would find it even more difficult to get jobs.”

When Ross pressed again, she acknowledged that it will be good for the recovery “for people to take some moderate risk.”

This sounds an awful lot like what her predecessor said on repeated occasions. Of course, there’s ample evidence Yellen shares Ben Bernanke’s views on savers.

We don’t think you should be shamed for being unwilling to take risk. In fact, it flies in the face of most retirement savings strategies, which go from riskier to conservative as the retirement age nears.

Interest rates aren’t likely to increase much anytime soon. But do you have any optimism Janet Yellen will help savers more than Bernanke did?

Take our poll.





Will Janet Yellen be better or worse to savers than Ben Bernanke?
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Comments (1)
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One Existing Comment
  1. deej said:
    on February 19th at 01:07 pm

    They will not raise rates when the economy improves for fear that it may cause another collapse. They will only raise rates to fix another problem, like inflation.