Fed's Yellen Sees Rates Low For Extended Period (JPM, BAC)

San Francisco Reserve Bank President Janet Yellen spoke at the University of San Diego's business school today and said the U.S. economy still needs extraordinarily low interest rates.

Yellen said inflation is "undesirably low" and growth will be sluggish for several years. She believes the U.S. economy will grow at a pace of 3.5 percent this year and 4.5 percent next year. She sees the economy operating below its potential for several years.

When discussing federal monetary policy, Yellen said, "I believe this is not the time to be removing monetary stimulus."

Last week speculation rose that the Fed would tighten monetary policy after it raised the discount rate 25 basis points to 0.75 percent. But, Fed officials stressed that the move did not amount to monetary tightening. Yellen said the increase in the discount rate reflected a return to a more normal financial environment.