Yellen: ‘Dangerous’ if People Don’t Believe Inflation Will Rise

RUSH TRANSCRIPT Chair Yellen ░░░░░░░░ afternoon At our meeting ░░░░░░░░ concluded earlier today my ░░░░░░░░ and I on the ░░░░░░░░ open market committee decided ░░░░░░░░ maintain the target range ░░░░░░░░ the federal funds rate ░░░░░░░░ 1 to 1 25 ░░░░░░░░ accommodative policy should support ░░░░░░░░ further strengthening in the ░░░░░░░░ market and return to ░░░░░░░░ inflation consistent with our ░░░░░░░░ objectives We also decided ░░░░░░░░ in October we will ░░░░░░░░ the balance sheet normalization ░░░░░░░░ that we outlined in ░░░░░░░░ This program will reduce ░░░░░░░░ securities holdings in a ░░░░░░░░ and predictable manner I ░░░░░░░░ have more to say ░░░░░░░░ these decisions shortly but ░░░░░░░░ I will review rate ░░░░░░░░ economic development in the ░░░░░░░░ As we expected smoothing ░░░░░░░░ some variation from quarter ░░░░░░░░ quarter economic activity has ░░░░░░░░ rising moderately so far ░░░░░░░░ year Household spending has ░░░░░░░░ supported by ongoing strength ░░░░░░░░ the job market Business ░░░░░░░░ has picked up and ░░░░░░░░ have shown greater strength ░░░░░░░░ year in part reflecting ░░░░░░░░ economic conditions abroad Overall ░░░░░░░░ expected the economy will ░░░░░░░░ to expand at a ░░░░░░░░ pace over the next ░░░░░░░░ years In the third ░░░░░░░░ however economic growth will ░░░░░░░░ held down by the ░░░░░░░░ disruptions caused by hurricanes ░░░░░░░░ Irma and MARIA Does ░░░░░░░░ activity resumes and rebuilding ░░░░░░░░ underway growth likely will ░░░░░░░░ back Based on past ░░░░░░░░ these affect are unlikely ░░░░░░░░ materially alter the course ░░░░░░░░ the national economy beyond ░░░░░░░░ next couple of quarters ░░░░░░░░ course for the families ░░░░░░░░ communities that have been ░░░░░░░░ by the storms recovery ░░░░░░░░ take time and on ░░░░░░░░ of the Federal Reserve ░░░░░░░░ me express our civic ░░░░░░░░ for all those who ░░░░░░░░ suffered losses In the ░░░░░░░░ market job gains averaged ░░░░░░░░ 000 per month over ░░░░░░░░ three months ending in ░░░░░░░░ A solid rate of ░░░░░░░░ and remain well above ░░░░░░░░ of the pace necessary ░░░░░░░░ absorb new entrance to ░░░░░░░░ labor force We know ░░░░░░░░ some timely indicators such ░░░░░░░░ initial claims for unemployment ░░░░░░░░ that the hurricane simulator ░░░░░░░░ the labor market in ░░░░░░░░ affected areas and payroll ░░░░░░░░ may be substantially affected ░░░░░░░░ September However such a ░░░░░░░░ should unwind relatively quickly ░░░░░░░░ the unemployment rate has ░░░░░░░░ low in recent months ░░░░░░░░ at 44 4 4 ░░░░░░░░ August was modestly below ░░░░░░░░ median of fomc participants ░░░░░░░░ of its longer run ░░░░░░░░ level Participation in the ░░░░░░░░ force has changed little ░░░░░░░░ recently and over the ░░░░░░░░ four years Given the ░░░░░░░░ downward trend in participation ░░░░░░░░ largely from the aging ░░░░░░░░ the U S Population ░░░░░░░░ study participation rate is ░░░░░░░░ further sign of improving ░░░░░░░░ in the labor market ░░░░░░░░ expect the job market ░░░░░░░░ strengthen somewhat further Turning ░░░░░░░░ inflation the 12 month ░░░░░░░░ in the price index ░░░░░░░░ personal consumption expenditures was ░░░░░░░░ 4 in July down ░░░░░░░░ from earlier in the ░░░░░░░░ Core inflation which excludes ░░░░░░░░ volatile food and energy ░░░░░░░░ has also moved lower ░░░░░░░░ quite some time inflation ░░░░░░░░ been running below the ░░░░░░░░ s 2 longer run ░░░░░░░░ However we believe this ░░░░░░░░ s shortfall in inflation ░░░░░░░░ reflects developments that are ░░░░░░░░ unrelated to broader economic ░░░░░░░░ For example one of ░░░░░░░░ earlier this year in ░░░░░░░░ categories of prices such ░░░░░░░░ wireless telephone services are ░░░░░░░░ holding down inflation But ░░░░░░░░ effects should be transitory ░░░░░░░░ developments are not uncommon ░░░░░░░░ as long as inflation ░░░░░░░░ remain reasonably well anchored ░░░░░░░░ not a concern from ░░░░░░░░ policy perspective because there ░░░░░░░░ stayed away Similarly the ░░░░░░░░ hurricane related increases in ░░░░░░░░ prices will likely boost ░░░░░░░░ but only temporarily More ░░░░░░░░ with employment near assessments ░░░░░░░░ its maximum sustainable level ░░░░░░░░ the labor market continuing ░░░░░░░░ strengthen committee committee continues ░░░░░░░░ expect inflation to move ░░░░░░░░ and stabilize around 2 ░░░░░░░░ the next couple of ░░░░░░░░ in line with our ░░░░░░░░ run objective Nonetheless our ░░░░░░░░ of the forces driving ░░░░░░░░ is in perfect imperfect ░░░░░░░░ light of the lower ░░░░░░░░ expected inflation readings this ░░░░░░░░ the committee is monitoring ░░░░░░░░ developments closely As always ░░░░░░░░ committee is prepared to ░░░░░░░░ monetary policy as needed ░░░░░░░░ achieve its inflation and ░░░░░░░░ objectives over the medium ░░░░░░░░ Let me turn to ░░░░░░░░ economic projections the committee ░░░░░░░░ submitted to this meeting ░░░░░░░░ now extend through 2020 ░░░░░░░░ always participants conditions are ░░░░░░░░ on their own individual ░░░░░░░░ of appropriate monetary policy ░░░░░░░░ in turn depends on ░░░░░░░░ participant cost assessment of ░░░░░░░░ many factors that shaped ░░░░░░░░ outlook The median projection ░░░░░░░░ growth of inflation adjusted ░░░░░░░░ gross domestic product or ░░░░░░░░ GDP is 2 4 ░░░░░░░░ year and about 2 ░░░░░░░░ 2018 and 2019 By ░░░░░░░░ the median growth production ░░░░░░░░ to 1 8 in ░░░░░░░░ with its estimated longer ░░░░░░░░ rate The median projection ░░░░░░░░ the unemployment rate stands ░░░░░░░░ 4 3 In the ░░░░░░░░ quarter of this year ░░░░░░░░ runs a little bit ░░░░░░░░ the next three years ░░░░░░░░ 9 this year and ░░░░░░░░ 9 in 2020 Compared ░░░░░░░░ the projection in June ░░░░░░░░ growth is attached stronger ░░░░░░░░ year and inflation particularly ░░░░░░░░ inflation is slightly softer ░░░░░░░░ year than next Otherwise ░░░░░░░░ projections are a little ░░░░░░░░ from June Returning to ░░░░░░░░ policy The committee decided ░░░░░░░░ meeting to maintain its ░░░░░░░░ to the federal funds ░░░░░░░░ and we continue to ░░░░░░░░ that the ongoing strength ░░░░░░░░ the economy will warrant ░░░░░░░░ increases in that rate ░░░░░░░░ sustain a healthy micro ░░░░░░░░ and statewide inflation that ░░░░░░░░ ongoing strength of the ░░░░░░░░ will around the 2 ░░░░░░░░ run objective That expectation ░░░░░░░░ based on a view ░░░░░░░░ the federal funds rate ░░░░░░░░ somewhat below its neutral ░░░░░░░░ That is the level ░░░░░░░░ is neither expansionary nor ░░░░░░░░ and keeps the economy ░░░░░░░░ on an even keel ░░░░░░░░ the neutral rate currently ░░░░░░░░ to be quite low ░░░░░░░░ historical standards the federal ░░░░░░░░ rate would not have ░░░░░░░░ rise much further to ░░░░░░░░ to a neutral policy ░░░░░░░░ Because we also expect ░░░░░░░░ neutral level of federal ░░░░░░░░ rate to rise someone ░░░░░░░░ time additional gradual rate ░░░░░░░░ are likely to be ░░░░░░░░ over the next few ░░░░░░░░ to sustain the economic ░░░░░░░░ Even so the committee ░░░░░░░░ to anticipate that the ░░░░░░░░ run neutral level of ░░░░░░░░ federal funds rate is ░░░░░░░░ to remain below level ░░░░░░░░ prevails in previous decades ░░░░░░░░ view is consistent with ░░░░░░░░ projections of appropriate monetary ░░░░░░░░ The median projection for ░░░░░░░░ federal funds rate is ░░░░░░░░ 4 at the end ░░░░░░░░ this year 2 1 ░░░░░░░░ next year 2 7 ░░░░░░░░ the end of 2019 ░░░░░░░░ 2 9 in 2020 ░░░░░░░░ to the projections made ░░░░░░░░ June the median path ░░░░░░░░ essentially unchanged Although the ░░░░░░░░ estimate of the longer ░░░░░░░░ Normal value gets down ░░░░░░░░ 2 8 As always ░░░░░░░░ economic outlook is highly ░░░░░░░░ and participants will adjust ░░░░░░░░ assessments of the appropriate ░░░░░░░░ to the federal funds ░░░░░░░░ in respond to changes ░░░░░░░░ response to changes of ░░░░░░░░ outlooks Policy is not ░░░░░░░░ a preset course As ░░░░░░░░ noted the committee announced ░░░░░░░░ that it will begin ░░░░░░░░ balance sheet normalization program ░░░░░░░░ October This program was ░░░░░░░░ in the June addendum ░░░░░░░░ a policy normalization principles ░░░░░░░░ plans gradually decrease our ░░░░░░░░ investments of proceeds from ░░░░░░░░ treasury securities and principal ░░░░░░░░ As a result the ░░░░░░░░ sheet will decline gradually ░░░░░░░░ predictably The decline in ░░░░░░░░ securities holdings will be ░░░░░░░░ at 6 billion per ░░░░░░░░ for treasuries and 4 ░░░░░░░░ per month for agencies ░░░░░░░░ caps will gradually rise ░░░░░░░░ the course of the ░░░░░░░░ year to maximums of ░░░░░░░░ billion per month and ░░░░░░░░ billion a month for ░░░░░░░░ securities And will remain ░░░░░░░░ place to the process ░░░░░░░░ normalizing the size of ░░░░░░░░ balance sheet By limiting ░░░░░░░░ volume of securities that ░░░░░░░░ investors will have to ░░░░░░░░ They cap should guard ░░░░░░░░ outside moves and interest ░░░░░░░░ and other potential market ░░░░░░░░ Finally as we have ░░░░░░░░ previously changing the target ░░░░░░░░ for the federal funds ░░░░░░░░ is the primary means ░░░░░░░░ adjusting the stance of ░░░░░░░░ policy Our balance sheet ░░░░░░░░ not intended to be ░░░░░░░░ active tool for monetary ░░░░░░░░ in Normal times We ░░░░░░░░ do not plan on ░░░░░░░░ adjustments for the balance ░░░░░░░░ normalization program We would ░░░░░░░░ prepared to resume re ░░░░░░░░ The economic outlook would ░░░░░░░░ a sizable reduction in ░░░░░░░░ federal funds rate Chris ░░░░░░░░ Bloomberg news There has ░░░░░░░░ extraordinary progress during your ░░░░░░░░ as chair in lowering ░░░░░░░░ measures of unemployment and ░░░░░░░░ All the while inflation ░░░░░░░░ remains of dude Some ░░░░░░░░ are asking why stop ░░░░░░░░ Chief economist I think ░░░░░░░░ know them well We ░░░░░░░░ it necessarily means keeping ░░░░░░░░ unemployment rate among black ░░░░░░░░ at 8 We describe ░░░░░░░░ to sacrifice many Hundreds ░░░░░░░░ thousands of potential workers ░░░░░░░░ in fact to the ░░░░░░░░ for firmed measure of ░░░░░░░░ has not exceeded 3 ░░░░░░░░ heading above the feds ░░░░░░░░ goal for inflation We ░░░░░░░░ charged with trying to ░░░░░░░░ maximum employment And we ░░░░░░░░ taken that very seriously ░░░░░░░░ advantaged groups the labor ░░░░░░░░ and African Americans and ░░░░░░░░ has fallen more dramatically ░░░░░░░░ that as a whole ░░░░░░░░ are very positive developments ░░░░░░░░ the objective over the ░░░░░░░░ term I recognize and ░░░░░░░░ is important that inflation ░░░░░░░░ been running under our ░░░░░░░░ objective for a number ░░░░░░░░ years That is particularly ░░░░░░░░ concern if it were ░░░░░░░░ translate into lower inflation ░░░░░░░░ occasions For a number ░░░░░░░░ years there are understandable ░░░░░░░░ for that shortfall It ░░░░░░░░ be largely disappeared none ░░░░░░░░ those factors are operative ░░░░░░░░ more of a mystery ░░░░░░░░ regular projection shows fan ░░░░░░░░ the typical size of ░░░░░░░░ and inflation The forecast ░░░░░░░░ ourselves and private forecasters ░░░░░░░░ errors So there is ░░░░░░░░ in these economic variables ░░░░░░░░ year to year I ░░░░░░░░ say our judgment is ░░░░░░░░ the shortfall is not ░░░░░░░░ related to cyclical considerations ░░░░░░░░ can see from the ░░░░░░░░ that the committee participants ░░░░░░░░ that we anticipate the ░░░░░░░░ and headline inflation will ░░░░░░░░ up close to a ░░░░░░░░ objective next year Mainly ░░░░░░░░ the shortfall this year ░░░░░░░░ due to transitory factors ░░░░░░░░ are likely to disappear ░░░░░░░░ the course of the ░░░░░░░░ year But I want ░░░░░░░░ emphasize that we do ░░░░░░░░ a commitment to raising ░░░░░░░░ to 2 And as ░░░░░░░░ are watching the coming ░░░░░░░░ the assessments that you ░░░░░░░░ participants write down about ░░░░░░░░ path of the federal ░░░░░░░░ rate They are not ░░░░░░░░ in stone They are ░░░░░░░░ definite plans We will ░░░░░░░░ at incoming data on ░░░░░░░░ including economic variables and ░░░░░░░░ what we should actually ░░░░░░░░ going forward And if ░░░░░░░░ proves contrary to expectations ░░░░░░░░ this shortfall is persistent ░░░░░░░░ be necessary to adjust ░░░░░░░░ policy to address that ░░░░░░░░ want to point out ░░░░░░░░ there are risks that ░░░░░░░░ could continue below 2 ░░░░░░░░ we need to take ░░░░░░░░ of an monetary policy ░░░░░░░░ policy also operates with ░░░░░░░░ land Experience suggests tightness ░░░░░░░░ the labor market tends ░░░░░░░░ push up wage and ░░░░░░░░ inflation There would be ░░░░░░░░ way to force later ░░░░░░░░ somewhere down the road ░░░░░░░░ have to tighten monetary ░░░░░░░░ The threat and the ░░░░░░░░ desirable labor market conditions ░░░░░░░░ is coming from the ░░░░░░░░ times The most recent ░░░░░░░░ highlight some of the ░░░░░░░░ with the inflation shortfalls ░░░░░░░░ have been seeing At ░░░░░░░░ meeting we tried to ░░░░░░░░ the economic outlook and ░░░░░░░░ account of information that ░░░░░░░░ been accumulated about the ░░░░░░░░ economy and the financial ░░░░░░░░ putting all that together ░░░░░░░░ assessing the course of ░░░░░░░░ economy Developments affecting asset ░░░░░░░░ the exchange rate all ░░░░░░░░ those aspects of financial ░░░░░░░░ factor into our thinking ░░░░░░░░ upward movements and asset ░░░░░░░░ can for example reflect ░░░░░░░░ change in market participants ░░░░░░░░ reduction in market There ░░░░░░░░ been downward revisions both ░░░░░░░░ the committees and to ░░░░░░░░ participants Estimates of the ░░░░░░░░ run Normal level of ░░░░░░░░ rates Going out many ░░░░░░░░ aggregate demand globally is ░░░░░░░░ to be weakened by ░░░░░░░░ low productivity growth and ░░░░░░░░ aging population And we ░░░░░░░░ t know if that ░░░░░░░░ is correct but it ░░░░░░░░ a factor that could ░░░░░░░░ reflected could be one ░░░░░░░░ why asset prices it ░░░░░░░░ important in determining the ░░░░░░░░ on the overall outlook ░░░░░░░░ certainly we are taking ░░░░░░░░ of movement and asset ░░░░░░░░ and evaluating the appropriate ░░░░░░░░ and policy Madam chair ░░░░░░░░ just said in your ░░░░░░░░ remarks that reducing the ░░░░░░░░ sheet should not be ░░░░░░░░ active tool for monetary ░░░░░░░░ I wonder if we ░░░░░░░░ explore if there is ░░░░░░░░ sensitivity to the plan ░░░░░░░░ just announced If there ░░░░░░░░ a spike in interest ░░░░░░░░ a plunge in the ░░░░░░░░ market weakness in growth ░░░░░░░░ the June statement they ░░░░░░░░ the only reason that ░░░░░░░░ would change the balance ░░░░░░░░ is if it required ░░░░░░░░ a change in the ░░░░░░░░ rate Is that true ░░░░░░░░ there some unexpected bout ░░░░░░░░ markets Or knowing what ░░░░░░░░ plans are on the ░░░░░░░░ side with a deficit ░░░░░░░░ terms of tax cuts ░░░░░░░░ will be balance sheet ░░░░░░░░ be immune to all ░░░░░░░░ that Given that question ░░░░░░░░ idea that this has ░░░░░░░░ been done before why ░░░░░░░░ much certainty and the ░░░░░░░░ unwillingness to adjust We ░░░░░░░░ policy tools that are ░░░░░░░░ for us to use ░░░░░░░░ balance sheet and adjustments ░░░░░░░░ short term for the ░░░░░░░░ Historically the committee has ░░░░░░░░ to adjust monetary conditions ░░░░░░░░ meet our economic goals ░░░░░░░░ there are shocks to ░░░░░░░░ economy And that is ░░░░░░░░ a technique of monetary ░░░░░░░░ that we are familiar ░░░░░░░░ How that tool has ░░░░░░░░ used and would likely ░░░░░░░░ adjusted in response to ░░░░░░░░ to the economy To ░░░░░░░░ adjust the stance of ░░░░░░░░ to prefer and make ░░░░░░░░ commitment that to the ░░░░░░░░ extent possible the federal ░░░░░░░░ rate would be the ░░░░░░░░ tool of policy That ░░░░░░░░ be what we intend ░░░░░░░░ use That the economy ░░░░░░░░ sufficiently great We might ░░░░░░░░ to cut the federal ░░░░░░░░ rate We moved it ░░░░░░░░ to one and a ░░░░░░░░ percent A significant negative ░░░░░░░░ to the economy could ░░░░░░░░ forces back to the ░░░░░░░░ called zero lower banner ░░░░░░░░ said if there was ░░░░░░░░ type of material deterioration ░░░░░░░░ could face a situation ░░░░░░░░ the federal funds rate ░░░░░░░░ t a sufficient tool ░░░░░░░░ us to discuss monetary ░░░░░░░░ We might stop Roelofs ░░░░░░░░ the balance sheet and ░░░░░░░░ reinvestment His long as ░░░░░░░░ believe that is what ░░░░░░░░ intend to do If ░░░░░░░░ are small changes in ░░░░░░░░ outlook that require recalibration ░░░░░░░░ monetary policy we will ░░░░░░░░ our anticipated path and ░░░░░░░░ of the federal funds ░░░░░░░░ But not for example ░░░░░░░░ the caps on reinvestment ░░░░░░░░ continue reinvestment for a ░░░░░░░░ months and then change ░░░░░░░░ It belies greater clarity ░░░░░░░░ will be less confusing ░░░░░░░░ more effective in terms ░░░░░░░░ conducting policy You have ░░░░░░░░ committed to a policy ░░░░░░░░ reducing balance sheet very ░░░░░░░░ You have described plans ░░░░░░░░ raise an interest rate ░░░░░░░░ more You re locked ░░░░░░░░ for a time to ░░░░░░░░ monetary policy to keep ░░░░░░░░ rates at a low ░░░░░░░░ I would say that ░░░░░░░░ are not locked in ░░░░░░░░ believe that economic conditions ░░░░░░░░ evolve in a way ░░░░░░░░ will warrant a gradual ░░░░░░░░ increases in our federal ░░░░░░░░ rate target If conditions ░░░░░░░░ differently than that it ░░░░░░░░ be that growth is ░░░░░░░░ rapid More quickly we ░░░░░░░░ inflation appears to be ░░░░░░░░ up more rapidly We ░░░░░░░░ not promised no matter ░░░░░░░░ the path of interest ░░░░░░░░ increases will be gradual ░░░░░░░░ believe it will be ░░░░░░░░ We are always watching ░░░░░░░░ economy and adjust policy ░░░░░░░░ appropriate The hurdle to ░░░░░░░░ the plans with respect ░░░░░░░░ the balance sheet in ░░░░░░░░ sense is high If ░░░░░░░░ were to weaken we ░░░░░░░░ really only consider resuming ░░░░░░░░ if it was what ░░░░░░░░ refer to as a ░░░░░░░░ deterioration And we try ░░░░░░░░ explain why that is ░░░░░░░░ will adjust monetary policy ░░░░░░░░ you see in the ░░░░░░░░ plot is each participant ░░░░░░░░ best guess about what ░░░░░░░░ be appropriate in light ░░░░░░░░ their expectations about how ░░░░░░░░ economy would evolve And ░░░░░░░░ think it is helpful ░░░░░░░░ show the public some ░░░░░░░░ that it helps in ░░░░░░░░ our evaluation We are ░░░░░░░░ incoming data and those ░░░░░░░░ are subject to change ░░░░░░░░ not subject to change ░░░░░░░░ commitment to doing everything ░░░░░░░░ our power to achieve ░░░░░░░░ goals that Congress has ░░░░░░░░ to us priced stability ░░░░░░░░ 2 inflation and maximum ░░░░░░░░ Inaudible So certainly if ░░░░░░░░ is stronger or inflation ░░░░░░░░ up more rapidly we ░░░░░░░░ room We have a ░░░░░░░░ amount of room now ░░░░░░░░ we have raised the ░░░░░░░░ rate for time We ░░░░░░░░ that we are on ░░░░░░░░ path where there will ░░░░░░░░ likely be further increases ░░░░░░░░ the next couple of ░░░░░░░░ which will give us ░░░░░░░░ room And we think ░░░░░░░░ recovery is on a ░░░░░░░░ track The reason we ░░░░░░░░ beginning to run down ░░░░░░░░ balance sheet is we ░░░░░░░░ the economy is performing ░░░░░░░░ and we have confidence ░░░░░░░░ the outlook for the ░░░░░░░░ economy There are shocks ░░░░░░░░ the negative shock to ░░░░░░░░ economy were sufficient we ░░░░░░░░ that we might be ░░░░░░░░ to pursue objectives purely ░░░░░░░░ cutting the federal funds ░░░░░░░░ That is why we ░░░░░░░░ explicitly that we would ░░░░░░░░ prepared in that event ░░░░░░░░ resume reinvestment and other ░░░░░░░░ that we used in ░░░░░░░░ financial crisis for guidance ░░░░░░░░ would also be available ░░░░░░░░ us Chair Yellen there ░░░░░░░░ a speech recently that ░░░░░░░░ inflation moved by about ░░░░░░░░ a percentage point Do ░░░░░░░░ agree And what was ░░░░░░░░ Fed need to do ░░░░░░░░ to boost inflation is ░░░░░░░░ has fallen Related to ░░░░░░░░ you said you expect ░░░░░░░░ softness this year to ░░░░░░░░ transitory Compared to three ░░░░░░░░ ago how firm is ░░░░░░░░ current expect tatian that ░░░░░░░░ will remain transitory What ░░░░░░░░ with that have for ░░░░░░░░ policy if it is ░░░░░░░░ Chair Yellen The term ░░░░░░░░ inflation usually there is ░░░░░░░░ variety of statistical techniques ░░░░░░░░ can be used to ░░░░░░░░ a trend from a ░░░░░░░░ Exactly what that means ░░░░░░░░ a statistical thing There ░░░░░░░░ methodologies that would show ░░░░░░░░ modest decline in recent ░░░░░░░░ After all we ve ░░░░░░░░ a number of years ░░░░░░░░ which inflation has an ░░░░░░░░ As I said in ░░░░░░░░ to an earlier question ░░░░░░░░ think if you go ░░░░░░░░ to 2013 and consider ░░░░░░░░ this year the reason ░░░░░░░░ inflation is not hard ░░░░░░░░ understand it s a ░░░░░░░░ of flak in the ░░░░░░░░ market declines in energy ░░░░░░░░ and a strong import ░░░░░░░░ inflation So what important ░░░░░░░░ determining inflation going forward ░░░░░░░░ inflation expectations By some ░░░░░░░░ measures of forecasters those ░░░░░░░░ have been rock solid ░░░░░░░░ will also look at ░░░░░░░░ expectations Market based measures ░░░░░░░░ inflation as we mentioned ░░░░░░░░ the statement It has ░░░░░░░░ stable in recent months ░░░░░░░░ that are low by ░░░░░░░░ standards and can t ░░░░░░░░ a clear read They ░░░░░░░░ it possible to extract ░░░░░░░░ what inflation expectations are ░░░░░░░░ can easily point to ░░░░░░░░ sufficient set of factors ░░░░░░░░ it lane this year ░░░░░░░░ inflation has been a ░░░░░░░░ idiosyncratic things Frankly the ░░░░░░░░ inflation is more broad ░░░░░░░░ The fact that inflation ░░░░░░░░ unusually low this year ░░░░░░░░ not mean it s ░░░░░░░░ to continue Remember that ░░░░░░░░ January and February core ░░░░░░░░ is going over a ░░░░░░░░ month basis at around ░░░░░░░░ 9 and we look ░░░░░░░░ be very close to ░░░░░░░░ months of data And ░░░░░░░░ we need to do ░░░░░░░░ figure out whether or ░░░░░░░░ the factors are likely ░░░░░░░░ prove persistent or they ░░░░░░░░ likely to prove transitory ░░░░░░░░ is what we are ░░░░░░░░ to try to be ░░░░░░░░ on the basis of ░░░░░░░░ data You ask me ░░░░░░░░ the policy implications Our ░░░░░░░░ changed and instead of ░░░░░░░░ the factors holding inflation ░░░░░░░░ transitory It came with ░░░░░░░░ view that it would ░░░░░░░░ persistent and require an ░░░░░░░░ in monetary policy And ░░░░░░░░ would be committed to ░░░░░░░░ that adjustment Markets seem ░░░░░░░░ be pricing in a ░░░░░░░░ path of rate hikes ░░░░░░░░ the Fed does I ░░░░░░░░ what you think markets ░░░░░░░░ be missing here and ░░░░░░░░ is your conviction that ░░░░░░░░ view is the correct ░░░░░░░░ about the pace they ░░░░░░░░ means I m not ░░░░░░░░ to try to explain ░░░░░░░░ market participants are thinking ░░░░░░░░ market and fomc participants ░░░░░░░░ come down not in ░░░░░░░░ last couple quarters but ░░░░░░░░ the last several years ░░░░░░░░ has been a growing ░░░░░░░░ of the so called ░░░░░░░░ interest rate consistent with ░░░░░░░░ economy operating at maximum ░░░░░░░░ That rate seems to ░░░░░░░░ most of the economic ░░░░░░░░ with research bearing on ░░░░░░░░ topic that suggests it ░░░░░░░░ quite low The fomc ░░░░░░░░ you can see by ░░░░░░░░ estimates of the longer ░░░░░░░░ Normal rate of interest ░░░░░░░░ time it came down ░░░░░░░░ 3 to 2 75 ░░░░░░░░ shows that even in ░░░░░░░░ long run fomc participants ░░░░░░░░ light of incoming data ░░░░░░░░ adjusting their views They ░░░░░░░░ believe that in real ░░░░░░░░ the neutral rate will ░░░░░░░░ rising somewhat That estimate ░░░░░░░░ real term amounts to ░░░░░░░░ aces points which is ░░░░░░░░ than the zero or ░░░░░░░░ positive rates now That ░░░░░░░░ one of the factors ░░░░░░░░ explains the path The ░░░░░░░░ participants may have lower ░░░░░░░░ or believe that a ░░░░░░░░ rate may be more ░░░░░░░░ Let me emphasize that ░░░░░░░░ I said before there ░░░░░░░░ nothing set in stone ░░░░░░░░ the policy that you ░░░░░░░░ for the summary of ░░░░░░░░ There is a great ░░░░░░░░ of uncertainty around them ░░░░░░░░ participants have been revising ░░░░░░░░ views over time And ░░░░░░░░ will continue to do ░░░░░░░░ I also want to ░░░░░░░░ out a couple of ░░░░░░░░ reasons why it is ░░░░░░░░ to compare what you ░░░░░░░░ in the Sep and ░░░░░░░░ implied paths Fomc participants ░░░░░░░░ are writing down what ░░░░░░░░ the most likely or ░░░░░░░░ outcome for rates There ░░░░░░░░ downside risks and the ░░░░░░░░ rate if they are ░░░░░░░░ to write that down ░░░░░░░░ take account of weighing ░░░░░░░░ possible outcomes and likely ░░░░░░░░ be lower than what ░░░░░░░░ are writing down as ░░░░░░░░ most likely outcome In ░░░░░░░░ in markets many economists ░░░░░░░░ suggested that there are ░░░░░░░░ premia that can affect ░░░░░░░░ from the so called ░░░░░░░░ implied path to the ░░░░░░░░ for what the future ░░░░░░░░ funds rate path is ░░░░░░░░ if the term premia ░░░░░░░░ negative as many economists ░░░░░░░░ they likely are there ░░░░░░░░ less of a difference ░░░░░░░░ what you see in ░░░░░░░░ fomc plot and the ░░░░░░░░ implied plot reporter Your ░░░░░░░░ expires as chair in ░░░░░░░░ Have you had a ░░░░░░░░ to meet with or ░░░░░░░░ your situation with President ░░░░░░░░ yet If so what ░░░░░░░░ your impressions of him ░░░░░░░░ what he is looking ░░░░░░░░ from the Federal Reserve ░░░░░░░░ Yellen I have said ░░░░░░░░ I intend to serve ░░░░░░░░ my term as chair ░░░░░░░░ that I am really ░░░░░░░░ going to comment on ░░░░░░░░ intentions the aunt that ░░░░░░░░ will beyond that I ░░░░░░░░ say I have not ░░░░░░░░ a personal meeting with ░░░░░░░░ Trump I met with ░░░░░░░░ early in my term ░░░░░░░░ I have not had ░░░░░░░░ further meeting with him ░░░░░░░░ A month ago you ░░░░░░░░ a speech in Wyoming ░░░░░░░░ which you said the ░░░░░░░░ of research suggests the ░░░░░░░░ have boosted resilience without ░░░░░░░░ credit availability or economic ░░░░░░░░ First what message do ░░░░░░░░ want Congress and President ░░░░░░░░ to hear from that ░░░░░░░░ Then regarding economic growth ░░░░░░░░ accommodative process the Fed ░░░░░░░░ followed for the last ░░░░░░░░ years has helped bring ░░░░░░░░ to full employment Economists ░░░░░░░░ out there have been ░░░░░░░░ who happened benefited 52 ░░░░░░░░ Americans haven t participated ░░░░░░░░ the gains in the ░░░░░░░░ market The median house ░░░░░░░░ is at a record ░░░░░░░░ 39 million Americans according ░░░░░░░░ a Harvard study spend ░░░░░░░░ than 30 for housing ░░░░░░░░ would you say to ░░░░░░░░ people about fed policies ░░░░░░░░ the impact they have ░░░░░░░░ on their lives Chair ░░░░░░░░ You asked me what ░░░░░░░░ the main first the ░░░░░░░░ message of my speech ░░░░░░░░ would say that it ░░░░░░░░ we have put in ░░░░░░░░ since the financial crisis ░░░░░░░░ set of court reforms ░░░░░░░░ have strengthened the financial ░░░░░░░░ In my personal view ░░░░░░░░ is important they remain ░░░░░░░░ place Those court reforms ░░░░░░░░ more capital higher quality ░░░░░░░░ more liquidity especially in ░░░░░░░░ important banking institutions stress ░░░░░░░░ and resolution plans Those ░░░░░░░░ prongs of improvements in ░░░░░░░░ supervision have really strengthened ░░░░░░░░ financial system and made ░░░░░░░░ more resilient I believe ░░░░░░░░ should stay in place ░░░░░░░░ I also try to ░░░░░░░░ and I believe they ░░░░░░░░ contributed to growth and ░░░░░░░░ availability of credit I ░░░░░░░░ also tried to emphasize ░░░░░░░░ all regulators should be ░░░░░░░░ to undo regulatory burden ░░░░░░░░ regulatory burden and look ░░░░░░░░ ways to scale that ░░░░░░░░ This is especially true ░░░░░░░░ years in which we ░░░░░░░░ implemented a large number ░░░░░░░░ complex regulations We have ░░░░░░░░ committed to doing that ░░░░░░░░ would point out particularly ░░░░░░░░ banks that are laboring ░░░░░░░░ significant regulatory burden We ░░░░░░░░ been looking for ways ░░░░░░░░ scale back burdens We ░░░░░░░░ listen to concerns among ░░░░░░░░ banks and we are ░░░░░░░░ for ways to simplify ░░░░░░░░ standards and reduce burdens ░░░░░░░░ is very important More ░░░░░░░░ we want to tailor ░░░░░░░░ would like to see ░░░░░░░░ we can do things ░░░░░░░░ appropriately Taylor regulations to ░░░░░░░░ risk posed by different ░░░░░░░░ of banking organizations There ░░░░░░░░ some things Congress could ░░░░░░░░ do to help that ░░░░░░░░ and we have made ░░░░░░░░ concrete suggestions Some of ░░░░░░░░ regulations that we have ░░░░░░░░ in place with other ░░░░░░░░ since the crisis like ░░░░░░░░ rule are quite complex ░░░░░░░░ are working we believe ░░░░░░░░ should and we are ░░░░░░░░ with other regulators to ░░░░░░░░ to find ways while ░░░░░░░░ out what god Frank ░░░░░░░░ what Dodd Frank intended ░░░░░░░░ implementation of can be ░░░░░░░░ complex That was my ░░░░░░░░ message Your second question ░░░░░░░░ about what impact the ░░░░░░░░ has had on income ░░░░░░░░ because of the fact ░░░░░░░░ stocks and homes tend ░░░░░░░░ be disproportionately I would ░░░░░░░░ look We are faced ░░░░░░░░ a huge recession that ░░░░░░░░ in a Norma s ░░░░░░░░ intern an enormous toll ░░░░░░░░ terms of depriving disproportionately ░░░░░░░░ income people who were ░░░░░░░░ advantaged in the labor ░░░░░░░░ They found themselves without ░░░░░░░░ We had a 10 ░░░░░░░░ rate and our congressional ░░░░░░░░ is maximum employment and ░░░░░░░░ stability We set monetary ░░░░░░░░ not with the view ░░░░░░░░ affecting the distribution of ░░░░░░░░ but towards pursuing those ░░░░░░░░ mandated goals and I ░░░░░░░░ pleased to see the ░░░░░░░░ rate in every other ░░░░░░░░ and every other measure ░░░░░░░░ know of pertaining to ░░░░░░░░ labor market show dramatic ░░░░░░░░ over these years and ░░░░░░░░ is hugely important to ░░░░░░░░ economic well being not ░░░░░░░░ the top back top ░░░░░░░░ of the wealth and ░░░░░░░░ distribution but to the ░░░░░░░░ end of the income ░░░░░░░░ We have seen gains ░░░░░░░░ income distribution reporter The ░░░░░░░░ month with the department ░░░░░░░░ with the departure of ░░░░░░░░ vice chair the Fed ░░░░░░░░ lose its quorum Is ░░░░░░░░ going to present operational ░░░░░░░░ for you Do you ░░░░░░░░ contingency plans and has ░░░░░░░░ Senate assured you that ░░░░░░░░ Quarles his confirmation will ░░░░░░░░ approved In your discussions ░░░░░░░░ the administration have they ░░░░░░░░ you any assurances that ░░░░░░░░ pace of a nomination ░░░░░░░░ going to pick up ░░░░░░░░ Chair Yellen First let ░░░░░░░░ say that I will ░░░░░░░░ miss vice chair fisher ░░░░░░░░ has made in arm ░░░░░░░░ contributions enormous contributions and ░░░░░░░░ have really enjoyed working ░░░░░░░░ him and appreciated his ░░░░░░░░ counsel and friendship It ░░░░░░░░ conceivable that we will ░░░░░░░░ down to three governors ░░░░░░░░ have full confidence that ░░░░░░░░ if that happens we ░░░░░░░░ be able to carry ░░░░░░░░ our complement of responsibilities ░░░░░░░░ is every action that ░░░░░░░░ are allowed to take ░░░░░░░░ the Federal Reserve can ░░░░░░░░ taken even if we ░░░░░░░░ a board of three ░░░░░░░░ we will have to ░░░░░░░░ as we always do ░░░░░░░░ the restrictions that are ░░░░░░░░ of the government I ░░░░░░░░ welcome a full complement ░░░░░░░░ colleagues We have a ░░░░░░░░ of work to do ░░░░░░░░ it would be nice ░░░░░░░░ distribute it over more ░░░░░░░░ but perhaps more important ░░░░░░░░ that I think it ░░░░░░░░ very important to have ░░░░░░░░ board a broad range ░░░░░░░░ views around the table ░░░░░░░░ we deliberate on policy ░░░░░░░░ I have had very ░░░░░░░░ interactions with Randy quarrels ░░░░░░░░ hope he will be ░░░░░░░░ I look forward to ░░░░░░░░ with him and I ░░░░░░░░ the administration will make ░░░░░░░░ nominations to fill our ░░░░░░░░ reporter As you know ░░░░░░░░ is considering a major ░░░░░░░░ reform package Do you ░░░░░░░░ any committee members have ░░░░░░░░ if the package doesn ░░░░░░░░ end up being deficit ░░░░░░░░ and adding to the ░░░░░░░░ would that be problematic ░░░░░░░░ the economy Chair Yellen ░░░░░░░░ is something that is ░░░░░░░░ matter for Congress and ░░░░░░░░ White House to decide ░░░░░░░░ know I have put ░░░░░░░░ a few principles about ░░░░░░░░ policy that I would ░░░░░░░░ that one of the ░░░░░░░░ the American economy suffers ░░░░░░░░ along with many other ░░░░░░░░ around the globe is ░░░░░░░░ productivity growth I think ░░░░░░░░ would be very desirable ░░░░░░░░ a fiscal pass a ░░░░░░░░ package had the potential ░░░░░░░░ create incentives that would ░░░░░░░░ productivity growth We do ░░░░░░░░ in terms of longer ░░░░░░░░ deficits as the population ░░░░░░░░ and unsustainable debt path ░░░░░░░░ will require I believe ░░░░░░░░ adjustments to fiscal policy ░░░░░░░░ I hope Congress will ░░░░░░░░ that in mind but ░░░░░░░░ a few core principles ░░░░░░░░ is really I don ░░░░░░░░ want to weigh in ░░░░░░░░ details reporter When you ░░░░░░░░ before Congress last July ░░░░░░░░ said you might be ░░░░░░░░ to take enforcement actions ░░░░░░░░ Wells Fargo If it ░░░░░░░░ to be appropriate Do ░░░░░░░░ think it is appropriate ░░░░░░░░ what actions could you ░░░░░░░░ Chair Yellen Let me ░░░░░░░░ that I consider the ░░░░░░░░ of wells Fargo towards ░░░░░░░░ customers to have been ░░░░░░░░ and unacceptable We take ░░░░░░░░ supervision responsibility with the ░░░░░░░░ very seriously and we ░░░░░░░░ attempting to understand what ░░░░░░░░ root causes of those ░░░░░░░░ are and to address ░░░░░░░░ I am not able ░░░░░░░░ discuss contravention can t ░░░░░░░░ information and not able ░░░░░░░░ tell you what actions ░░░░░░░░ may take but I ░░░░░░░░ want to say that ░░░░░░░░ are committed to taking ░░░░░░░░ actions we regard as ░░░░░░░░ and appropriate to make ░░░░░░░░ that the right set ░░░░░░░░ controls are in place ░░░░░░░░ that organization reporter Can ░░░░░░░░ give me a timeline ░░░░░░░░ Yellen We are working ░░░░░░░░ hard on it reporter ░░░░░░░░ you I would like ░░░░░░░░ follow up on the ░░░░░░░░ sheet question if I ░░░░░░░░ What specifically would it ░░░░░░░░ for you to reverse ░░░░░░░░ decision to wind down ░░░░░░░░ balance sheet and under ░░░░░░░░ conditions would you consider ░░░░░░░░ to the balance sheet ░░░░░░░░ separately a follow up ░░░░░░░░ that looking more broadly ░░░░░░░░ do you think history ░░░░░░░░ judge the effectiveness of ░░░░░░░░ actions and the conditions ░░░░░░░░ which debt policy should ░░░░░░░░ used Chair Yellen Starting ░░░░░░░░ the last part of ░░░░░░░░ question my own judgment ░░░░░░░░ on my experience and ░░░░░░░░ economic research that has ░░░░░░░░ to estimate the effectiveness ░░░░░░░░ our balance sheet actions ░░░░░░░░ in 2008 has also ░░░░░░░░ at the similar balance ░░░░░░░░ actions in other parts ░░░░░░░░ the world including the ░░░░░░░░ area These actions were ░░░░░░░░ in making financial conditions ░░░░░░░░ accommodative and I believe ░░░░░░░░ stimulating a faster recovery ░░░░░░░░ we otherwise would of ░░░░░░░░ would have had the ░░░░░░░░ working paper estimated that ░░░░░░░░ full set of balance ░░░░░░░░ actions that we took ░░░░░░░░ the crisis may have ░░░░░░░░ long term interest rates ░░░░░░░░ about 100 basis points ░░░░░░░░ is obviously there are ░░░░░░░░ estimates around of what ░░░░░░░░ it made but I ░░░░░░░░ say that it s ░░░░░░░░ would be up to ░░░░░░░░ policymakers to decide in ░░░░░░░░ event of a severe ░░░░░░░░ whether they think it ░░░░░░░░ appropriate to again resort ░░░░░░░░ balance sheet to adding ░░░░░░░░ to a balance sheet ░░░░░░░░ would say that if ░░░░░░░░ are correct we are ░░░░░░░░ in a world where ░░░░░░░░ interest rates not only ░░░░░░░░ the United States but ░░░░░░░░ the world is likely ░░░░░░░░ be low in the ░░░░░░░░ due to slow productivity ░░░░░░░░ in demographics We don ░░░░░░░░ know that that will ░░░░░░░░ out to be correct ░░░░░░░░ it is a view ░░░░░░░░ many people adhere to ░░░░░░░░ there is evidence of ░░░░░░░░ Then future policymakers will ░░░░░░░░ faced with the question ░░░░░░░░ in the event of ░░░░░░░░ severe downturn where they ░░░░░░░░ not able to provide ░░░░░░░░ stimulus as much stimulus ░░░░░░░░ they would like by ░░░░░░░░ overnight interest rates what ░░░░░░░░ actions are available to ░░░░░░░░ During the crisis we ░░░░░░░░ we bought longer term ░░░░░░░░ and used forward guidance ░░░░░░░░ my own part I ░░░░░░░░ want to keep those ░░░░░░░░ in the toolkit as ░░░░░░░░ available It will be ░░░░░░░░ to future policymakers to ░░░░░░░░ how to rank those ░░░░░░░░ or not there might ░░░░░░░░ other options other available ░░░░░░░░ them I don t ░░░░░░░░ this issue will go ░░░░░░░░ although perhaps this could ░░░░░░░░ be a decision that ░░░░░░░░ policymakers will have to ░░░░░░░░ in the event of ░░░░░░░░ significant economic shock You ░░░░░░░░ me what would it ░░░░░░░░ for us to resume ░░░░░░░░ Emma and I can ░░░░░░░░ really say much more ░░░░░░░░ we said in the ░░░░░░░░ we provided which is ░░░░░░░░ if there is a ░░░░░░░░ deterioration in the economic ░░░░░░░░ and we thought we ░░░░░░░░ be faced with a ░░░░░░░░ where we would need ░░░░░░░░ substantially cut the federal ░░░░░░░░ rate and could be ░░░░░░░░ by the so called ░░░░░░░░ lower band it is ░░░░░░░░ type of determination that ░░░░░░░░ committee is saying would ░░░░░░░░ lead us to resume ░░░░░░░░ So that is our ░░░░░░░░ has been unanimous and ░░░░░░░░ affirming this statement of ░░░░░░░░ So I think that ░░░░░░░░ where our committee stands ░░░░░░░░ is a somewhat high ░░░░░░░░ to resume reinvestment s ░░░░░░░░ that is why in ░░░░░░░░ previous questions I would ░░░░░░░░ if there is some ░░░░░░░░ negative shock our first ░░░░░░░░ our most important and ░░░░░░░░ tool would be the ░░░░░░░░ funds rate but there ░░░░░░░░ there is a significant ░░░░░░░░ if there is material ░░░░░░░░ in the outlook we ░░░░░░░░ consider resuming reinvestment s ░░░░░░░░ You have been on ░░░░░░░░ financial stability oversight council ░░░░░░░░ a few years now ░░░░░░░░ was wondering if you ░░░░░░░░ any thoughts on whether ░░░░░░░░ designation process for systemically ░░░░░░░░ financial institutions should be ░░░░░░░░ or improved in any ░░░░░░░░ Somewhat separate but related ░░░░░░░░ situation with aqua fax ░░░░░░░░ was wondering if there ░░░░░░░░ anything related to that ░░░░░░░░ might raise systemic issues ░░░░░░░░ you would need to ░░░░░░░░ Chair Yellen You asked ░░░░░░░░ about the designation process ░░░░░░░░ the time that I ░░░░░░░░ been on the F ░░░░░░░░ several firms were designated ░░░░░░░░ I participated MetLife was ░░░░░░░░ during the time I ░░░░░░░░ there and I have ░░░░░░░░ how the does it ░░░░░░░░ process works the designation ░░░░░░░░ works I do think ░░░░░░░░ is important We saw ░░░░░░░░ the financial crisis that ░░░░░░░░ important non banking organizations ░░░░░░░░ AIG their distress produces ░░░░░░░░ systemic consequences that were ░░░░░░░░ for the U S ░░░░░░░░ and having the ability ░░░░░░░░ designate firms we would ░░░░░░░░ the dish the determination ░░░░░░░░ distress or failure would ░░░░░░░░ systemic repercussions I believe ░░░░░░░░ is an important policy ░░░░░░░░ policy tool to have ░░░░░░░░ Now it is not ░░░░░░░░ to be a one ░░░░░░░░ street in the sense ░░░░░░░░ a firm that is ░░░░░░░░ would be procedures require ░░░░░░░░ reviews Firms may change ░░░░░░░░ business models or it ░░░░░░░░ just I just how ░░░░░░░░ conduct adjust they conduct ░░░░░░░░ business We will welcome ░░░░░░░░ if the business model ░░░░░░░░ changed in a way ░░░░░░░░ leads us to believe ░░░░░░░░ their failure would no ░░░░░░░░ be systemically important and ░░░░░░░░ designations we make every ░░░░░░░░ I am satisfied with ░░░░░░░░ process so far One ░░░░░░░░ change their model and ░░░░░░░░ believe it is a ░░░░░░░░ that works I know ░░░░░░░░ treasury is looking at ░░░░░░░░ and may make recommendations ░░░░░░░░ am glad to consider ░░░░░░░░ as part of the ░░░░░░░░ but I think it ░░░░░░░░ been important and basically ░░░░░░░░ You asked about equifax ░░░░░░░░ is a serious data ░░░░░░░░ We would urge consumers ░░░░░░░░ to be very careful ░░░░░░░░ monitoring their credit reports ░░░░░░░░ financial situation and through ░░░░░░░░ supervision we are working ░░░░░░░░ the banks that we ░░░░░░░░ to make sure that ░░░░░░░░ take appropriate actions with ░░░░░░░░ to their business processes ░░░░░░░░ light of the fact ░░░░░░░░ there could be breaches ░░░░░░░░ fraudulent transactions where information ░░░░░░░░ they received that they ░░░░░░░░ use for example in ░░░░░░░░ determination could be contaminated ░░░░░░░░ bad data More generally ░░░░░░░░ points to the importance ░░░░░░░░ strong cyber security controls ░░░░░░░░ attention to cyber security ░░░░░░░░ which we do see ░░░░░░░░ one of the most ░░░░░░░░ risks to the financial ░░░░░░░░ and we are very ░░░░░░░░ in our banking supervision ░░░░░░░░ making sure that banks ░░░░░░░░ appropriate controls in place ░░░░░░░░ equifax breach highlights the ░░░░░░░░ of that reporter We ░░░░░░░░ talked today about what ░░░░░░░░ are going to do ░░░░░░░░ what you may do ░░░░░░░░ not necessarily about why ░░░░░░░░ rate increases behind you ░░░░░░░░ conditions are looser than ░░░░░░░░ you began and I ░░░░░░░░ wondering if that bothers ░░░░░░░░ if you are concerned ░░░░░░░░ overstimulating the economy or ░░░░░░░░ you feel inflation could ░░░░░░░░ out much more quickly ░░░░░░░░ we have seen or ░░░░░░░░ you feel there is ░░░░░░░░ financial stability question because ░░░░░░░░ bonds and real estate ░░░░░░░░ also expensive now How ░░░░░░░░ you explain what the ░░░░░░░░ is doing why the ░░░░░░░░ is doing it to ░░░░░░░░ American people Chair Yellen ░░░░░░░░ of all let me ░░░░░░░░ that the decisions we ░░░░░░░░ made this year about ░░░░░░░░ and today about our ░░░░░░░░ sheet are ones we ░░░░░░░░ taken because we feel ░░░░░░░░ U S economy is ░░░░░░░░ well We are working ░░░░░░░░ the balance sheet because ░░░░░░░░ feel that a stimulus ░░░░░░░░ some sense is no ░░░░░░░░ needed So the basic ░░░░░░░░ here is U S ░░░░░░░░ performance has been good ░░░░░░░░ labor market has strengthened ░░░░░░░░ Every measure of the ░░░░░░░░ market whether it is ░░░░░░░░ narrow unemployment rate the ░░░░░░░░ unemployment rate the number ░░░░░░░░ people working in part ░░░░░░░░ jobs who want full ░░░░░░░░ work the level of ░░░░░░░░ openings the quit rate ░░░░░░░░ difficulty firms are facing ░░░░░░░░ hiring workers the level ░░░░░░░░ confidence we see in ░░░░░░░░ about the labor market ░░░░░░░░ of that is pointing ░░░░░░░░ vast and continuing improvement ░░░░░░░░ the labor market We ░░░░░░░░ sufficient strength in the ░░░░░░░░ in terms of spending ░░░░░░░░ growth with its UPS ░░░░░░░░ downs is nevertheless strong ░░░░░░░░ in the medium term ░░░░░░░░ support ongoing improvement in ░░░░░░░░ labor market and all ░░░░░░░░ that is good and ░░░░░░░░ think that the American ░░░░░░░░ should feel the steps ░░░░░░░░ are taking to normalize ░░░░░░░░ policy are ones we ░░░░░░░░ are well justified given ░░░░░░░░ very substantial progress we ░░░░░░░░ seen in the economy ░░░░░░░░ inflation is running below ░░░░░░░░ we want it to ░░░░░░░░ and we have talked ░░░░░░░░ that a lot during ░░░░░░░░ last hour This past ░░░░░░░░ it was not clear ░░░░░░░░ the reasons are It ░░░░░░░░ not been mysterious in ░░░░░░░░ past but one way ░░░░░░░░ another we have had ░░░░░░░░ or five years in ░░░░░░░░ inflation is running below ░░░░░░░░ our objection is We ░░░░░░░░ committed to achieving that ░░░░░░░░ monetary policy path that ░░░░░░░░ follow and the paths ░░░░░░░░ my colleagues are writing ░░░░░░░░ and our projections we ░░░░░░░░ will be appropriate given ░░░░░░░░ conditions They are ones ░░░░░░░░ we think are necessary ░░░░░░░░ move inflation back up ░░░░░░░░ 2 and maintain a ░░░░░░░░ labor market on a ░░░░░░░░ basis In making these ░░░░░░░░ about the path of ░░░░░░░░ we have to balance ░░░░░░░░ risks One risk is ░░░░░░░░ if we tighten policy ░░░░░░░░ quickly we may find ░░░░░░░░ that although we don ░░░░░░░░ think this now the ░░░░░░░░ shortfall is something that ░░░░░░░░ be persistent If we ░░░░░░░░ too quickly we could ░░░░░░░░ inflation performance leave it ░░░░░░░░ two low level level ░░░░░░░░ expectations could fall and ░░░░░░░░ could become dangerous That ░░░░░░░░ a reason to because ░░░░░░░░ about to be cautious ░░░░░░░░ raising interest rates when ░░░░░░░░ is as low as ░░░░░░░░ is On the other ░░░░░░░░ we have a strong ░░░░░░░░ market and a lowered ░░░░░░░░ rate and also it ░░░░░░░░ not quite as strong ░░░░░░░░ year as for example ░░░░░░░░ was in 2016 We ░░░░░░░░ still averaging 175 000 ░░░░░░░░ per month this year ░░░░░░░░ is quite a bit ░░░░░░░░ the pace of 120 ░░░░░░░░ It would be consistent ░░░░░░░░ stable unemployment rate if ░░░░░░░░ force participation moves down ░░░░░░░░ the manner we expect ░░░░░░░░ we don t do ░░░░░░░░ to remove policy accommodation ░░░░░░░░ the labor market tightens ░░░░░░░░ continues to tighten as ░░░░░░░░ mentioned arguably financial conditions ░░░░░░░░ have been heightened that ░░░░░░░░ The economy could overheat ░░░░░░░░ could rise more quickly ░░░░░░░░ is something that would ░░░░░░░░ with the lag and ░░░░░░░░ would force us later ░░░░░░░░ to tighten policy more ░░░░░░░░ than would be ideal ░░░░░░░░ we could risk of ░░░░░░░░ if we did that ░░░░░░░░ are risks on both ░░░░░░░░ of our objectives and ░░░░░░░░ of my colleagues and ░░░░░░░░ included this gradual path ░░░░░░░░ rate increases while constantly ░░░░░░░░ incoming data being open ░░░░░░░░ revising our reviews on ░░░░░░░░ outlook and revising our ░░░░░░░░ is the best way ░░░░░░░░ manage that set of ░░░░░░░░