December 16, 2015
JYJanet L. YellenDecember 16, 2015 FOMC Press Conference
- The chair said the rate increase marks the end of a seven-year period of near-zero rates following the worst financial crisis since the Great Depression.
- The chair noted that 2.3 million jobs were added so far this year, with average monthly gains of 218,000 over the most recent three months.
- The chair stated that the neutral nominal federal funds rate is currently low by historical standards and likely to rise only gradually over time.
- The chair said the Board of Governors raised the interest rate on required and excess reserves to ½ percent and authorized overnight reverse repurchase operations at ¼ percent, effective tomorrow.
- The chair said the median projection for the federal funds rate rises to nearly 1½ percent in late 2016 and 2½ percent in late 2017.
From the opening statement
Press conference
CHAIR YELLEN. Good afternoon. Earlier today, the Federal Open Market Committee decided to raise the target range for the federal funds rate by ¼ percentage point, bringing it to ¼ to ½ percent.
This action marks the end of an extraordinary seven-year period during which the federal funds rate was held near zero to support the recovery of the economy from the worst financial crisis and recession since the Great Depression. It also recognizes the considerable progress that has been made toward restoring jobs, raising incomes, and easing the economic hardship of millions of Americans. And it reflects the Committee’s confidence that the economy will continue to strengthen. The economic recovery has clearly come a long way, although it is not yet complete. Room for further improvement in the labor market remains, and inflation continues to run below our longer-run objective. But with the economy performing well and expected to continue to do so, the Committee judged that a modest increase in the federal funds rate target is now appropriate, recognizing that even after thi s increase, monetary policy remains accommodative. As I will explain, the process of normalizing interest rates is likely to proceed gradually, although future policy actions will obviously depend on how the economy evolves relative to our objectives of maximum employment and 2 percent inflation.
Since March, the Committee has stated that it would raise the target range for the federal funds rate when it had seen further improvement in the labor market and was reasonably confident that inflation would move back to its 2 percent objective over the medium term. In our judgment, these two criteria have now been satisfied.