Yellen Balks at Proposal to Tie Rates to Formula

The House bill would require the Fed to adopt a mathematical formula for determining the appropriate level for its benchmark short-term interest rate, which influences other borrowing costs across the economy. The bill's proponents cite as an example the so-called Taylor rule, devised by Stanford University economics professor John Taylor, which calculates the ideal level of the rate based on changes in several economic variables.

Ms. Yellen defended the Fed's position of holding interest rates lower than such a rule would prescribe, saying, "It is utterly necessary for us to provide more monetary-policy accommodation than those simple rules would have suggested."