Federal Reserve Chair Janet Yellen reportedly described the future global economic outlook as “uncertain” on Feb. 10 before Congress.
Yellen was testifying at the House Financial Services Committee on risks in the global economy when she made the comment, NPR reports. She specifically named concerns regarding China’s currency policy and market volatility as forces that could affect the U.S. economy.
“ ... Foreign economic developments, in particular, pose risks to U.S. economic growth," Yellen said, according to NPR. " ... [D]eclines in the foreign exchange value of the renminbi have intensified uncertainty about China’s exchange rate policy and the prospects for its economy."
Renminbi is China's official currency.
The Feb. 10 testimonial was the first since the Fed pushed interest rates higher in December 2015. Yellen said she does not believe that the Fed will be in a position to lower interest rates in the near future.
The Fed chair did note an optimistic outlook for U.S. incomes and spending. Yellen said the Federal Open Market Committee “expects that with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace in coming years and that labor market indicators will continue to strengthen.”
Members of Congress had varying reactions to Yellen’s testimony.
“I feel like I’m at a ballroom dance on the deck of the Titanic,” Democratic Rep. Brad Sherman of California said at the hearing.
Sherman pushed Yellen to split apart large financial institutions, arguing that they are unstable and threaten the U.S.’s economy.
Meanwhile, Republican Rep. Blaine Luetkemeyer of Missouri questioned the Fed's ability to influence the U.S. economy during a downturn, citing the fact that interest rates are still very low.
"What happens if we have a downturn and you've already got $4 trillion on your balance sheet?" he asked. "What levers are still available to you to do something?"
Larry Elliott, economics editor of the Guardian, noted that Yellen’s comments indicate that falling stock prices would slow down the U.S. economy, but stop short of causing an economic crisis.
“…[T]he key phrase of Janet Yellens testimony was when she said conditions in the U.S. had become ‘less supportive of growth,'" Elliott told the Guardian.
The Dow Jones Index fell 99 points after Yellen’s testimony.