Yellen: Fed May Pause Tapering if Weakness Persists; Can’t Regulate Bitcoin

Fed assessing weather impact on ‘soft data’ of economy; Fed ‘doesn’t have authority with respect to Bitcoin’

Federal Reserve Board Chairwoman Janet Yellen said Thursday that the Fed would assess in the coming weeks whether the “unseasonably” cold weather has caused the uptick in “soft data” over the past four to six weeks, noting that the central bank may pause the tapering of bond purchases if weakening conditions persist.

“Quite a range of data has been soft recently” — low unemployment, slow growth in payrolls, and “softer spending” in housing and retail sales, Yellen told members of the Senate Banking Committee. “Unseasonably cold weather has played a role,” she said, adding that “in the weeks ahead” the Fed would “get a firmer handle on how much of this soft data can be explained by weather.”

Yellen’s prepared testimony was nearly identical to the one she delivered to the House Financial Services Committee on Feb. 11. She strayed from it, however, to note the recent deterioration in economic growth since her first appearance before lawmakers.

Winter weather delayed Yellen’s Feb. 13 testimony before the Senate Banking Committee, which was rescheduled for Thursday.

Yellen told the Senators that the FOMC would likely reduce the pace of asset purchases in further meetings, but again reiterated the point that asset purchases “are not on a preset course.”

When asked if the Fed would be involved in regulating Bitcoin, what Sen. Joe Manchin, R-W.Va., called an “unstable currency,” Yellen replied that “Bitcoin is a payment innovation that’s taking place entirely outside the banking industry.”

Said Yellen: “To the best of my knowledge there’s no intersection at all, in any way, between Bitcoin and banks that the Federal Reserve has the ability to supervise and regulate. So the Fed doesn’t have authority to supervise or regulate Bitcoin in any way.”

The Fed, she continued, "doesn’t have authority with respect to Bitcoin. But certainly it would be appropriate for Congress to ask questions about what the right legal structure would be for digital currencies.”

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