Fed will vary interest on reserves when tightening policy: Yellen

SAN DIEGO Sat Jan 5, 2013 1:44pm EST

Janet Yellen, vice chair of the Board of Governors of the U.S. Federal Reserve System, speaks at the University of California Berkeley Haas School of Business in Berkeley, California November 13, 2012. REUTERS/Robert Galbraith

Janet Yellen, vice chair of the Board of Governors of the U.S. Federal Reserve System, speaks at the University of California Berkeley Haas School of Business in Berkeley, California November 13, 2012.

Credit: Reuters/Robert Galbraith

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SAN DIEGO (Reuters) - Federal Reserve Vice Chair Janet Yellen reiterated on Saturday that the U.S. central bank will use its ability to pay interest on excess bank reserves to tighten monetary policy at some stage in the future.

"We are quite likely and have decided we will almost surely rely on varying that - the level of interest on reserves - when the day comes when we will be ready to exit a period of accommodative monetary policy," she told a panel discussion at the annual meeting of the American Economic Association.

(Reporting by Alister Bull; Editing by Andrea Ricci)

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