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Federal Reserve Chair Janet Yellen said Friday that the US jobs market has not yet fully recovered, but acknowledged that data is sending mixed signals, spurring debate over inflationary pressures. In a speech to leading central bankers in Jackson Hole, Wyoming, Yellen, who has kept Fed policy expansive due to perceived excess slack in the jobs market, gave no clear new signs for monetary policy. The hawks argue that the sharp fall of the jobless rate to 6.2 percent is a clear foretoken of inflation and want the Fed to move forward its timeline for an interest rate hike next year. While agreeing that the data is sending mixed signals, Yellen did not embrace the argument that a burst of inflation is looming and demands a decisive policy adjustment, like moving forward an interest rate hike to early 2015 from later in the year.
In a speech at a central banking conference here, Yellen laid out in detail why she feels the unemployment rate alone is inadequate to evaluate the strength of the jobs market and why the Fed needed to move cautiously in deciding when to raise interest rates. At the same time, she nodded to the concerns of some Fed officials who are growing uneasy with the sustained level of the central bank's monetary policy stimulus.