Fed's Yellen makes case for keeping rates low (by Steve Goldstein)

WASHINGTON (MarketWatch) - The Federal Reserve's number-two ranking official on Wednesday made the case for keeping interest rates low for some time, arguing the economy will continue to grow only gradually and that the unemployment rate will remain high for years. "Based on such analysis, I consider a highly accommodative policy stance to be appropriate in present circumstances," said Janet Yellen, the Fed's vice chair. She presented at New York University a number of models and rules that, if followed, wouldn't begin interest rates hikes until 2015 and possibly later. Yellen, making her first speech since November, insisted that the Fed's current guidance isn't that the central bank "will" keep rates exceptionally low until at least 2014 - only that it anticipates the economy will evolve in a way that would warrant such policy. She said a new round of asset purchases would only be appropriate if the economy grows more slowly than forecast and said rate hikes would be needed only if the economy grows more rapidly or if the economy's productive potential is less than what she currently forecasts.