Opening remarks from Yellen
- Move recognises considerable progress in the economy
- Room remains for further labour market improvement
- FOMC judged modest increase in rates was appropriate
- Further process of normalisation is likely to be gradual
- Labour market has clearly shown signs of further improvement
- 5.0% unemployment close to median longer running level
- Underemployment has also improved solidly
- Some cyclical weakness remains in labour market
- Wages have yet to show sustained pick up
- Net exports have been restrained by dollar an foreign growth
- New home building still remains low
- Business investment has shown solid gains
- With gradual rate adjustments, moderate growth is seen
- Overseas risks have lessened since last summer
- Anticipation of growth underpins inflation
- Much of the shortfall from inflation target is tied to energy
- Strength of dollar has also weighed on CPI
- As these transitory factors fade, inflation should rise to 2.0%
- Confidence in inflation relies on anchored expectations
- LT inflation expectations are stable overall
- Diminishing slack in labour should help boost CPI
- Delaying lift off too long would risk an abrupt tightening
- Importance of initial hike should not be overstated
- Fed recognises that it takes time for policy action to have an impact
- Neutral FFR low by historical standards
- Growth moderate in recent years despite low rate
- Fall in neutral rate may be partly due to headwinds
- Headwinds include household deleveraging, fiscal contraction and uncertainty
- As headwinds abate neutral rate should move higher
- Stronger growth or faster inflation would make steeper hikes appropriate
- Disappointing growth would mean they would rise more slowly
These last two comments are fairly as it means a downturn won't necessarily mean cutting. The buck is reading dovish on the path of hikes view
A would make steeper hikes appropriate
n all purple Yeller
