Yellen Not Supportive of Proposal For Tying Rates to Formula

Yellen Not Supportive of Proposal For Tying Rates to FormulaJanet L. Yellen, the chairwoman of the Federal Reserve, on Wednesday said that it would be an action which can be considered as a "grave mistake" fin part of the Congress if it decides to adopt legislation proposed by House Republicans which restricts the Fed's administration over the monetary policy.

Strong words flew between Yellen and Republican lawmakers during a tetchy hearing before the House Financial Services Committee which maintained its focus on a bill where the Fed would require publishing a set of rules for making increases or decreases in the rates of interest.

According to Yellen this kind of a rule would weaken the ability of the Fed's to administer the economy, and would hamper its ability when quick actions are required to be taken during financial crises. She said it "would essentially undermine central bank independence."

Republicans called Yellen reaction as alarmist to a proposal which they think would do nothing else than humbly increasing the accountability of the Fed's by demanding better transparency.

Jeb Hensarling, the chairman of the committee heavily condemned what he described as "howling protests and apocalyptic visions from my Democratic colleagues," calling them "apologists for the status quo."