Yellen notes economy and job market remain subpar while inflation is below Fed's target

WASHINGTON – Janet Yellen says the economy has regained ground lost to the deepest recession since the 1930s. But she says unemployment remains too high at 7.3 per cent and the Fed is trying to accelerate the recovery.

In testimony prepared for her confirmation hearing Thursday, Yellen says the job market and the economy are still performing far below their potential. And she notes that inflation is running well below the Fed’s 2 per cent target.

Yellen says that supporting the economy is the “surest path to returning to a more normal approach” to Fed interest-rate policies in the future. Her comments appear to be a signal that she favours continued use of the extraordinary support measures the Fed has been using to keep borrowing rates low.