7:08 PM
WASHINGTON | Mon Nov 15, 2010 9:08pm EST
WASHINGTON (Reuters) - The Federal Reserve is not trying to push down the value of the dollar or push inflation above 2 percent with its program of massive new bond purchases, the central bank's vice chairwoman said.
In an interview published on Monday in the Wall Street Journal, Janet Yellen defended the Fed's decision this month to purchase $600 billion more of U.S. Treasury bonds in a bid to strengthen economic growth.
"The purpose of it is not to push down the dollar. This should not be regarded as some sort of chapter in a currency war," she said.
The Fed's action drew domestic and international criticism that the Fed was trying to undermine the dollar.
Yellen said the U.S. economy would continue to grow but it would take a long time to get unemployment down from 9.6 percent to 8 percent.
"I'm having a hard time seeing where really robust growth can come from. And I see inflation lingering around current levels for a long time," she said.
"If you ask me to name an unemployment rate we'd see at the end of 2012, it would probably be around 8 percent. I expect a pickup in growth next year. I don't expect a double-dip recession," she said.
Yellen told the Wall Street Journal that it was not fair to paint the Fed's bond purchase program as a cause of capital flow problems in other countries.
Asked whether she thought a domestic political backlash to the Fed's move was a threat to the central bank's independence, Yellen said: "It is our obligation to explain ourselves and the logic of what we've decided to do as clearly as possible and to address criticisms. I am not happy to see us caught up in a political debate. But Congress has assigned us tasks which we need to carry out as best we can."
(Reporting by Jeff Mason and JoAnne Allen, editing Christopher Wilson)
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