HENSARLING: I will say this if I can, Madam Chair, there's one thing that the Fed says. It's another that markets may hear.
My time is running out. I want to cover a little other ground, as well dealing with a rules based monetary policy.
I think if I have read some of your statements properly -- and I don't want to put words in your mouth -- but that you consider times five years after the financial crisis still extraordinary, and it is not necessarily an appropriate time for a rules-based approach?
Is that a fair assessment of your views?
YELLEN: So I have always been in favor of a predictable monetary policy that responds in a systematic way to shifts in economic variables...
HENSARLING: Well, in fact, earlier in your career, with respect -- in reference to the Taylor rule you said it is, quote, "What sensible central banks do," unquote.
So that begs the question today, using your words, are you a sensible central banker, and if not, when will you become one?
YELLEN: Congressman, I believe that I am a sensible central banker, and these are very unusual times in which monetary policy for quite a long time is not even been able to do what a rule like the Taylor Rule would have prescribed. For several years, that rule would have prescribed that the federal funds rate should be in negative territory, which is impossible.
So the conditions facing the economy are extremely unusual.
I have tried to argue and believe strongly that, while a Taylor Rule is -- or something like it -- provides a sensible approach in more normal times, like the great moderation, under current conditions when this economy has severe headwinds from the financial crisis, and has not been able to move the funds rate into the negative territory that rule would have prescribed that we need to follow a different approach. And we are attempting, through our forward guidance, to be as systematic and predictable as we can possibly be.