December 14, 2016 FOMC Press Conference

Press conference

CHAIR YELLEN. Good afternoon. Today the Federal Open Market Committee decided to raise the target range for the federal funds rate by ¼ percentage point, bringing it to ½ to ¾ percent. In doing so, my colleagues and I are recognizing the considerable progress the economy has made toward our dual objectives of maximum employment and price stability. Over the past year, 2¼ million net new jobs have been created, unemployment has fallen fu rther, and inflation has moved closer to our longer -run goal of 2 percent. We expect the economy will continue to perform well, with the job market strengthening further and inflation rising to 2 percent over the next couple of years. I’ll have more to say about monetary policy shortly, but first I’ll review recent economic developments and the outlook.

Economic growth has picked up since the middle of the year. Household spending continues to rise at a moderate pace, supported by income gains and by relatively high levels of consumer sentiment and wealth. Business investment, however, remains soft despite some stabilization in the energy sector. Overall, we expect the economy will expand at a moderate pace over the next few years.

Job gains averaged nearly 180,000 per month over the past three months, maintaining the solid pace that we ’ve seen since the beginning of the year. Over the past seven years, since the depths of the Great Recession, more than 15 million jobs have been added to the U.S. econom y. The unemployment rate fell to 4.6 percent in November, the lowest level since 2007, prior to the recession. Broader measures of labor market slack have also moved lower, and participation in the labor force has been little changed, on net, for about two years now, a further sign of improved conditions in the labor market given the underlying downward trend in participation stemming largely from the aging of the U.S. population. Looking ahead, w e expect that job conditions will strengthen somewhat further.