Market Manipulation

Yellen Says No End To Recession In Sight
4/16/2009 8:25 PM ET

San Francisco Federal Reserve Bank President Janet Yellen says the Fed's monetary policy may have played a role in the U.S. credit boom and the resulting housing price bubble. But she added they were by no means the only factor.

Yellen also said the U.S. has entered its sixth quarter of recession, with no end on the immediate horizon.

"While we've seen some tentative signs of improvement in the economic data very recently, it's still impossible to know how deep the contraction will ultimately be," she said. "The global nature of the downturn raises the odds that the recession will be prolonged, since neither we nor our trade partners can look to a boost from foreign demand."

In remarks prepared for delivery Thursday in New York City, Yellen said the Fed's "accommodative stance" from 2002 to 2004 was motivated by then-Chairman Alan Greenspan and what she called "risk management policy."

Yellen added that while financial bubbles can be difficult to recognize early, not dealing with certain kinds of bubbles before they get big "can have grave consequences."

Yellen said a combination of risky behavior by financial institutions and U.S. households contributed to the financial system meltdown.