Yellen Wisely Keeps the Fed on a Steady Course

There was much speculation that Federal Reserve Chair Janet Yellen would use her speech to central bankers and economists gathered at Jackson Hole, Wyoming, on Friday to announce a major policy initiative. Some even suggested that she might add to growing talk about an expansion of the Fed's tool kit, along with a change in objectives.

Instead, she made no major announcements and produced no major surprises. Yellen limited her remarks to familiar issues. She noted improvements in the economic situation, particularly “the continued solid performance of the labor market and outlook for economic activity and inflation,” which strengthen the case for a Fed rate hike. She reiterated that what the Fed will end up doing remains data dependent. And she signaled that its existing tool kit continues to be appropriate.