Many people are not particularly happy with Federal Reserve Chairwoman Janet Yellen and her recent take on the U.S. economy. The miniscule rate hike implemented in December was a mere drop in the bucket according to some analysts and many lawmakers are concerned with the chair’s future moves.

At a meeting before the House Financial Services Committee in Washington on Wednesday, Yellen practically admitted that she didn’t know which direction the Fed would be taking and despite her forecast several months ago that there would be 4 small rate increases in 2016, she seems to be backtracking now.

In fact, while the Fed continues to predict four interest rate hikes this year, the market now forecasts zero hikes in 2016. The closely watched Fed Futures market now stands at a 60% probability of no rate hikes at all this year, a dramatic U-turn from only a month ago when the market was pricing in a 75% probability the Fed would increase rates at least once in 2016.

Yellen at Senate

The Fed chair is expected to continue her testimony on Capitol Hill when she speaks to the Senate today and her testimony is not expected to surprise. Her main concerns at the moment are the strength of the U.S. dollar, stock volatility in the U.S. and increasing costs for borrowing money.

The strong dollar hurts U.S. companies that sell products abroad because it makes those goods more expensive for foreign buyers resulting in a severe loss for American manufacturers and exporters.

2016 started off rather poorly for the U.S. stock markets and the broad S&P 500 is already down 8.5% for the first six weeks of the year.

As far as borrowing costs, Yellen has already pointed to the Fed’s latest survey of banks which showed that borrowing rates have already gone up and that commercial lending standards are tightening. Junk bond market rates have been rising, especially after one junk bond fund, the Third Avenue Focused Credit Fund, collapsed in December. In addition, many oil companies have either filed for bankruptcy and defaults are skyrocketing.

Yellen also stated during her two-day Congressional testimony that the slowdown in China's economy and the decline in value of its currency, the yuan, had sparked some of the recent market volatility. In fact, she claimed that a weak yuan has major implications for global trade and firmly blamed the uncertainty of China's currency for the rise in global growth fears. She noted that the uncertainty itself has led to increased volatility in global financial markets and, “against the background of persistent weakness abroad, exacerbated concerns about the outlook for global growth."

What About Using Negative Interest Rates?

Despite what some economists, including former Fed chair Ben Bernanke, believe the Fed will probably not bring interest rates down into negative territory any time in the near future.

When Japan's central bank introduced negative interest rates just two weeks ago it set many in Congress wondering if the Fed would consider using negative rates if the U.S. economy took a turn for the worse. The concept was suggested in 2010 as a way of dealing with a faltering economy but was not put into effect at the time. Many lawmakers are re-introducing the idea now but are questioning if the Fed even has the legal authority to use negative rates.

Yellen on Wednesday responded to the query by saying that she wasn't aware of any law that prevented the Fed from using negative rates and reminded her listeners of its consideration back in 2010. She said, however, that it was unlikely the Fed would cut rates anytime soon from its current 0.25%.

During her testimony on the first day of the Congressional meeting, Yellen was asked how she planned to deal with the Black community and its employment problems. Black unemployment is 8.8%, far higher than the white unemployment rate of 4.3% or national average of 4.9% and the African American segment of the population is suffering more than any other community in the U.S.

Yellen agreed that the black unemployment rate is too high but said it is not a specific metric the Fed's committee discusses when it considers raising interest rates. She did, however, agree that there has never been a black president at one of the Fed’s regional banks and that she is regretful of the fact.