The Latest: Yellen opposes strict formula in setting rates

WASHINGTON (AP) - The Latest on Federal Reserve Chair Janet Yellen's testimony to the Senate Banking Committee (all times local):

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11:15 a.m.

Federal Reserve Chair Janet Yellen says that if the Fed had followed a strict numerical formula in setting interest rate policies, the economy now would be weaker and unemployment higher.

Under one such formula, called the Taylor rule, she said the Fed's key interest rate would now be between 3.5 percent and 4 percent - far higher than the current range of 0.5 percent to 0.75 percent.

Asked whether a higher rate would mean fewer jobs and a weaker economy, Yellen said, "That's right."

Republicans in Congress are pushing to require the Fed to adopt a specific guide in its rate policies and to face a congressional audit if it deviated from it. Yellen has warned that such an approach would rob the Fed of the flexibility in needs to manage rate policies effectively.

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10 a.m.

Federal Reserve Chair Janet Yellen says the central bank still expects to raise interest rates at a gradual pace this year but understands the dangers of waiting too long to tighten credit.

Testifying to Congress for the first time since President Donald Trump took office, Yellen referred implicitly to the ambitious economic program Trump has promised. She said the Fed recognizes that sharp changes in tax policy and government spending could influence the Fed's decisions.

But she says "it's too early to know what policy changes will be put in place or how their economic effects will unfold."

Many economists say they think Trump's stimulus program could cause the Fed to accelerate the pace of its rate increases beyond the three it has said it envisions for this year.