Nominee unclear on further increases


WASHINGTON -- Janet L. Yellen, President Clinton's nominee to the Federal Reserve Board, yesterday dispelled some of the mystery surrounding her views on interest-rate policy but did not take a clear position on whether she would support further increases in interest rates this year.

The views that Ms. Yellen sketched out at her confirmation hearing before the Senate Banking Committee suggested that she might be slightly less willing than her future colleagues to raise rates to curb inflation, but would still fall within the mainstream at the central bank.

If confirmed by the full Senate, as seems likely soon, Ms. Yellen would become President Clinton's second appointee on the seven-member Federal Reserve Board.Alan S. Blinder joined the board last month.

Some economists have speculated that the new nominees may be slightly more reluctant to raise interest rates and slightly more willing to tolerate inflation than are the five Republican appointees.

The Fed's decisions in the coming months will affect the health of the U.S. economy in 1996, when President Clinton is expected to seek re-election.

Mr. Blinder at his confirmation hearing in May and Ms. Yellen at her hearing yesterday both sought to present themselves as middle-of-the-road economists who would prevent inflation from rising while also trying to avoid pushing interest rates to levels that might induce a recession.

But a hint of skepticism about interest-rate increases arose in Ms. Yellen's remarks when she discussed the central bank's four decisions this spring to raise short-term interest rates.

"I agree with the Fed's decision to reduce monetary stimulus -- before the emergence of obvious inflationary pressure -- in order to avoid overshooting the natural rate" of economic growth, she said.

"On the other hand, the appropriate amount of tightening involves some guesswork, and it is difficult to know whether the actions that have been taken thus far will prove sufficient to prevent overheating, insufficient to the task at hand or possibly excessive."

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