March 15, 2017
JYJanet L. YellenMarch 15, 2017 FOMC Press Conference
- The Chair declined to provide a specific quantitative definition of "well under way" regarding balance sheet normalization, framing it instead in qualitative terms related to confidence in the economic trajectory and balanced risks.
- The Chair said the neutral nominal federal funds rate is currently quite low by historical standards, with longer-run real neutral rate estimates around 1 percent or slightly below, and some current estimates placing it near zero in real terms.
- The Chair stated that the FOMC had not discussed detailed responses to potential fiscal policy changes from the new Administration, emphasizing that today’s decision was based solely on progress toward the Fed’s dual mandate.
- The Chair explained that removing the word "only" before "gradual" in the statement should not be overinterpreted, noting it was a small change and that economic projections were virtually unchanged from December.
- The Chair said she had met a couple of times with Treasury Secretary Mnuchin and had a brief introduction to President Trump, with discussions covering the economy, regulatory objectives, FSOC work, and global developments.
From the opening statement
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 ¾ to 1 percent. Our decision to make another gradual reduction in the amount of policy accommodation reflects the economy’s continued progress toward the employment and price stability objectives assigned to us by law. For some time the Committee has judged that, if economic conditions evolved as anticipated, gradual increases in the federal funds rate would likely be appropriate to achieve and maintain our objectives. Today’s decision is in line with that view and does not represent a reassessment of the economic outlook or of the appropriate course for monetary policy. I’ll have more to say about monetary policy shortly, but first I’ll review recent economic developments and the outlook.
The economy continues to expand at a moderate pace. Solid income gains and relatively high levels of consumer sentiment and wealth have supported household spending growth. Business investment, which was soft for much of last year, has firmed somewhat, and business sentiment is at favorable levels. Overall, we continue to expect that the economy will expand at a moderate pace over the next few years.
Job gains aver aged about 200,000 per month over the past three months, maintaining the solid pace we have seen over the past year. The unemployment rate was 4.7 percent in February, near its recent low. Broader measures of labor market underutilization also remain low. Participation in the labor force has been little changed, on net, for about three years. Given the underlying downward trend in participation stemming largely from the aging of the U.S. population, a relatively steady participation rate is a further si gn of improving conditions in the labor market. Looking ahead, we expect that job conditions will strengthen somewhat further.