Fed's Yellen says austerity policies may be counterproductive

WASHINGTON Mon Feb 11, 2013 2:55pm EST

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WASHINGTON Feb 11 (Reuters) - Austerity policies in the United States and Europe that sharply cut spending to reduce budget deficits could be self-defeating if they derail economic growth, Federal Reserve Vice Chair Janet Yellen said on Monday.

"Both for the United States and for Europe ... fiscal austerity does raise unemployment, weaken the economy and ... in addition undermines the goals for which it is designed to achieve," Yellen said.

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