Yellen, Janet

SHELBY: Madam Chair, the FOMC's target for the fed funds rate has been at one-half percent or lower since December, 2008. A report last year from the Bank of International Settlements found that the prolonged period of low interest rates may be damaging the U.S. economy resulting in, and I'll quote, "Too much debt and too little growth." In addition the report states, "The low rates may in part have contributed to costly financial booms and busts."

Do you agree that persistently low interest rates can have negative long-term effects on the U.S. economy and could you explain?

YELLEN: Well, I believe that persistent low interest rates we've had have been essential to achieving the progress, but of course low rates can induce households or banks or firms to reach for yield and can stoke financial instability and we are very attentive to that possibility and I would not at this time say that the threats from low rates to moderate to financial stability are elevated. I do not think they're elevated at this time, but it is of course something that we need to watch because it can have that impact. You mention debt, I don't think we're seeing an (inaudible) build up of debt throughout the economy.