Janet Yellen mounts staunch defence of quantitative easing Janet Yellen mounted a vigorous defence of the Federal Reserve's asset purchase programme, known as quantitative easing, as she delivered a confident and comfortable performance to Congress at a confirmation hearing to lead the US central bank. Ms Yellen told members of the Senate banking committee that it was "imperative to do what we can to promote a strong economic recovery." She noted that the labour market had improved, but was still performing "far short" of its potential, with unemployment at 7.3 per cent. She added that the benefits of the Fed's unconventional asset purchase programme - worth $85bn a month, on top of ultra-low interest rates - exceeded its costs. "These purchases have made a meaningful contribution to economic growth and to the improving outlook," she said. Ms Yellen's tone was relatively dovish, but she did not offer any big clues about when the Fed might begin slowing, or tapering, the pace of its asset purchases. After a strong jobs report for October, some economists believe the Fed could make such a move as early as December, but most expect that moment will not come until early next year. Ms Yellen said there was "no set time" for tapering and at each Fed meeting officials were assessing whether there had been sufficient progress in the labour market to justify such a decision. Throughout a hearing that lasted more than two hours, Ms Yellen faced scepticism from Republican lawmakers about the effectiveness, risks, and seemingly open-ended nature of the Fed's easy money policies. One described them as a "morphine drip," another as a "sugar high," and another still as "elitist." "If the labour market doesn't improve to the point that you reach your target, how long can this continue?" asked Mike Crapo, the top Republican on the Senate banking committee. Ms Yellen responded: "It cannot go on forever, there are costs and risks associated with the programme. We're monitoring those very carefully. Overall, however, the criticism levelled at Ms Yellen from Republicans was relatively muted, suggesting that her confirmation will be approved by the Senate and she will take over from Ben Bernanke when his term at the helm of the Fed ends in January. Bob Corker, an influential Republican senator from Tennessee, ended his questioning with praise for Ms Yellen's "candour and transparency." Democrats have thrown their weight behind Ms Yellen, and Tim Johnson, the chairman of the Senate banking committee, said he was "excited" to vote in her favour. "We need her expertise at the home of the Fed as the nation continues to recover from the Great Recession, completes Wall Street rule-makings and continues to enhance the stability of our financial sector," Mr Johnson said. The Fed's role in financial regulation was also prominently discussed at the hearing. Although Elizabeth Warren, a liberal Democrat from Massachusetts, is a Yellen supporter, she pressed her on whether the Fed's lack of attention to regulation and supervision helped lead to the financial crisis of 2008. She told Ms Yellen the Fed needs to make regulatory policing as important as monetary policy, with which Ms Yellen agreed. Ms Yellen also said the Fed has revamped its supervisory processes, and noted that a top priority now was to monitor the financial system, which the Fed did not adequately do before the financial crisis. Senators Sherrod Brown, an Ohio Democrat, and David Vitter, a Louisiana Republican, focused on ending "Too Big to Fail" for large banks and increasing capital standards beyond what has already been proposed, two areas in which the two lawmakers have proposed legislation. Ms Yellen acknowledged that more work needs to be done to address Too Big to Fail, but she declined to commit to any additional standards, saying it was better to finish the rulemaking from the Dodd-Frank legislation before considering more regulations. It was a few Democratic senators who also criticised the Financial Stability Oversight Council, which is made up of the banking and market regulators and was set up to assess systematic risk in the financial system. Ms Yellen has not participated in an FSOC meeting yet, but will if she becomes Fed chair. Democrat Jon Tester, from Montana, criticised the council's lack of transparency, among other issues, which echoes accusations made by insurance companies and asset managers. The council is studying increased regulation for asset managers, and has already designated AIG and other insurers as systematically important.