Obama, Yellen discuss economy, financial rules

AP News
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Posted: Nov 03, 2014 4:35 PM

WASHINGTON (AP) — With the Federal Reserve's role in the nation's economic recovery at a crossroads, Fed Chair Janet Yellen on Monday sat down with President Barack Obama in their first face-to-face meeting since she assumed her post in February. The White House said the two discussed their perspectives on the economy both at home and abroad.

The White House called the meeting "part of an ongoing dialogue on the state of the economy, financial reform, and other economic issues."

The Fed last week announced the end of its landmark bond-buying program, a form of economic stimulus largely credited with helping the recovery by increasing the supply of money to financial institutions and keeping long-term interest rates low.

Yellen now faces a key decision on when to raise short-term interest rates, which the Fed has kept at a record low near zero since December 2008. Many economists believe the first rate increase will not occur until June at the earliest although the Fed has maintained that it will be dependent on the performance of the economy, which has seen some strengthening in the job market.

The Fed is an independent institution and presidents insist they do not meddle in the central bank's monetary policy decisions. But faced with a politically divided Congress and the possibility of a Republican-led House and Senate following Tuesday's elections, Obama's own economic policies have faced resistance. That makes the Fed one of the most influential players in the nation's economic trajectory.

The meeting also comes a week ahead of Obama's Asia trip which includes a gathering in Australia of the Group of 20 largest economies. U.S. policy makers have been keeping a wary eye on the economic struggles overseas, particularly China where the economy has been slowing down and in Europe where the eurozone nations are in danger of a third recession in seven years.

"Obviously the Fed is an independent body," White House spokesman Josh Earnest said. "They make their own policies, but there is an opportunity for the president and the chair of the Fed to have conversations. Those conversations, at least in the context of today, are focused on the long-term outlook for the American economy and even the longer-term impact of the global economy as well."

Obama, who held periodic meetings with Ben Bernanke when he chaired the central bank, did see Yellen last month while meeting with financial regulators to review measures aimed at avoiding a repeat of the 2008 financial crisis. Monday's meeting was their first meeting alone.

Yellen and Obama on Monday also discussed the implementation of the financial regulatory law that Congress passed and Obama signed in 2010.

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Associated Press Economics Writer Martin Crutsinger contributed to this article.