Fed official: Fixing the job market could take years

Janet Yellen, the vice chairwoman of the Federal Reserve Board, thinks both Congress and the Fed need to do more to lift the economy.

NEW YORK (CNNMoney)

Janet Yellen, who as vice chairwoman of the Federal Reserve Board is number two in command to Ben Bernanke, believes that the central bank should continue to focus its policies on boosting the economy and the job market in particular.

"It will be a long road back to a healthy job market," she said. "It will be years before many workers feel like they have regained the ground lost since 2007."

Yellen is known as an inflation dove, concerned more about the weak job market than the possibility of prices rising rapidly any time soon. Those on the opposite side of the spectrum, known as inflation hawks, criticize the Fed's policies for weakening the dollar and potentially fueling asset bubbles, for example in bonds or farmland.

Related: Federal Reserves hawks vs. doves

Yellen nodded to those critics in her speech, but given the current low inflation rate, she said "it is entirely appropriate" for jobs "to take center stage."

She also cited the unemployment rate of 7.9% and the poverty rate at 15% as signs that both Congress and the Fed need to do more to boost the economy.

"These are not just statistics to me," she said. "We know that long-term unemployment is devastating to workers and their families."

The Fed's recent policies keep interest rates at record lows and entail buying $85 billion a month in Treasuries and mortgage-backed securities, in an effort to lower interest rates even further.

The hope is that by making it cheaper for consumers and businesses to borrow money, they'll spend more on homes, cars and other items.

"I believe that these steps will increase demand, and more demand means more jobs," Yellen said.

First Published: February 11, 2013: 1:33 PM ET

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