"We have a very serious recession, we have a 9.4 percent jobless rate," and inflation possibly falling over time below preferred level, she said Tuesday after a speech to the Commonwealth Club of California in San Francisco. "If we were not at zero, we would be lowering the funds rate," she said.
Yellen’s comments go beyond those made by other policy makers after a June 23-24 meeting, when they said the federal funds rate will likely stay at "exceptionally low levels" for "an extended period." They have held the rate, also known as the overnight lending rate between banks, at between zero and 0.25 percent since December.
The Fed "did succeed in averting a full-blown meltdown," Yellen said in the speech. Nevertheless, the threat of another financial shock, such as one from falling commercial real-estate prices, is "high on my worry list."
Yellen said the U.S. economy may be about to "turn the corner" and reiterated her expectation that the recession will end later this year.
"Right now, we’re like a patient in intensive care whose condition has stabilized and whose fever is just starting to come down," Yellen said in her speech.