Yellen see’s room for further Fed easing

SAN FRANCISCO (Reuters) – Janet Yellen, the Federal Reserve’s influential vice chair, said on Tuesday the U.S. central bank has room to ease monetary policy further to support a tenuous economic recovery.

Yellen said turmoil in financial markets stemming from both Europe’s banking crisis and general uncertainty about the outlook had increased the risks to the global economy, and that the Fed could offer additional support to U.S. growth.

“The scope remains to provide additional accommodation through enhanced guidance on the path of the federal funds rate or through additional purchases of long-term financial assets,” Yellen said in remarks prepared for delivery to a conference sponsored by the San Francisco Federal Reserve Bank.

Yellen also called for policies to spur a faster recovery in the battered U.S. housing market, although she did not provide any specific recommendations.

The Fed in September decided to dip its toes back into the housing market by reinvesting proceeds of maturing mortgage and housing agency debt from its portfolio back into the mortgage-backed securities market.