Thursday, September 17, 2015

Yellen Conference record 18 questions to fully understand what fed thinking

Federal Reserve President Janet Yellen (Janet l. Yellen)

2:30 A.M. in Beijing, Chairman of the Federal Reserve Janet Yellen (Janet l. Yellen) unveiled at a press conference after the rate. September chose to sit on their hands because of the Federal Reserve, FOMC members viewed United States economy, this Conference is for some time to come, hear from Fed policymakers, the most authoritative voice in the market.

When the press conference lasted about 40 minutes, above all Yellen speech, followed by a question and answer session, answering a total of 18 questions.

Since completed two days of testimony to Congress by mid-July, Yellen has not talked publicly. At that time, she said the economy may need to raise interest rates this year. However, in her statement, State of global turmoil. Global stock markets fell and China's economy started to slow down. USD emerging-market currencies have risen sharply against the dollar and falling commodity prices.

Yellen is a press conference question-and-answer transcript below:

1,CNBC by Steve Leaseman: Madam President, the current uncertainty caused by turmoil and global economic growth expected to fall, can it be said, the global economy still requires many months before the United States achieve the target data? If you cannot determine a few months may come sometime next year, you will continue to raise interest rates?

Yellen: you can view the September forecast, most participants continued to believe that economic conditions will be required, or at the end of this year, increasing the United States the federal funds rate. Forecasts four participants mentioned in 2016 or later.

But most participants continued to believe that before the end of the. Of course there will always be uncertainties, we cannot expect such uncertainty can be completely solved.

But in view of the developments, and their impact on financial markets, we need more time to assess the United States may be caused by impact. It's like I said, inflation expectations declined. Subsequent changes we have been able to see, in particular, oil prices continue to fall and the dollar rise further, will lead to the decline in inflation in the short term. Now we are fully convinced that these effects, the dollar and oil changes are temporary, slight downward pressure on inflation. We hope to continue to see further changes, including the labour market had continued to improve, and will strengthen our confidence in the medium-term inflation back to the target of 2%.

2 financial times, Fei Jiaming (Sam Flemming): I would like to raise questions on the October meeting. As a live press conference, until now mainly October meeting even the Conference schedule has not yet been determined? You need to see what kind of economic situation have the confidence to raise interest rates in the short term? Do you think is the future changes in the financial markets is more important than data is more important? Thank you so much.

Yellen: therefore, as I said before, each session is a live meeting, during the Committee can make a change in the target federal funds interest rate decisions. This, of course, including October. As you know I have previously emphasized, is that we decide to do this, we will hold a press conference, you can join to get relevant information.

So, in October remains a possibility.

We will continue to look at financial and economic development, in an effort to ensure that we feel that the United States economy is really performing well.

You know, I want to emphasize is that economic development in the country to increase strongly. We have seen solid growth in domestic demand. The labour market continued to improve. Of course, we will confirm our expectations based on future data, this will continue. We will of course depend on the global financial and economic development.

I can't tell you exactly what we observe. However, as we have said, we would like to see continued improvement in the labour market, strengthen confidence, bringing inflation back to 2%. Gradual improvement in the labour market will be able to achieve this objective. Are there other indicators to strengthen the faith.

3, Los Angeles Times, Jim: before meeting a group of protesters outside the venue. Global Central Bank annual meeting in Jackson Hole, Wyoming is also a similar crowd. They and others have warned the Fed not raising interest rates, because the labor market is not fully recovered, wage increase and fast enough. Decisions in this matter to you and your colleagues have any effect?

Yellen: so, we have heard from many economists and interest groups the views. It is also appropriate. We attach importance to the different views of various groups and individuals. But in the end it's the Fed's job, collecting ideas, analysis of economic data to determine how to influence the future.

We have contact with many of the participants, and median normal unemployment for a long time, my own judgment is at least have been able to reflect the true situation. Unemployment there is enough space, particularly with regard to very high rates of part-time employment, involuntary unemployment. While labour force participation showed that employment standards to a certain extent, and underestimated the degree of slack in the labour market. However, the fact that we are approaching. Now in the labour market had improved. As I have said before, we do not want to wait until we are in full compliance with our two goals, only started to lag to austerity.

4, the Wall Street Journal Kaite·daiweisen (Kate Davidson): Madam President, since the nearly two months since the last session, you think it's closer to or away from the Fed's inflation target?

>> Yellen: your first question is that we are closer to or away from the target. As I have said, we hope that medium-term inflation back to 2%. Although I noted in a recent statement, recent developments have brought some of the downward pressure on inflation, but they are currently well below the inflation target.

An important reason is that, because of falling import prices caused by the dollar, lower energy prices to curb inflation, so the current inflation rate is far below our target, and far below core inflation. We expect that these effects are only temporary and inflation can be expected to determine, so we expect the inflation rate to return to 2%. Since the last meeting, gradual appreciation, continued downward pressure on energy prices. So this thing has little influence during the labor market will continue to improve. Therefore, a tighter labour market. To the full employment of labour market, overall inflationary pressures in its history. So this supports my confidence in rising inflation. The other hand, we have been running on the below-target inflation for a long time.

The Fed believes that inflation targeting is important, prevent the rate of inflation above the inflation target. We hope to not only market expectations also have confidence in the market. We also noted that the decline in inflation compensation claims. And hard to read directly from these inflation expectations.

5, the New York Times aipubaomu (Ben Applebaum): you released today shows, members almost agree, within three years, will maintain a minimum level of sustainable unemployment rate, but the rate of inflation will not rise above 2%. This conclusion seems to be very special. To talk about why we think that inflation pressure? When the unemployment rate is at a relatively low level, why inflation will remain vulnerable for such a long time? When you indicate that a decade later, the Fed also failed to meet the inflation target, does this mean that you could not do enough for economic recovery in recent years much work?

Yellen: well, we've been very focused on all means in our power, to revive the economy, achieve the goal of maximum employment. After we put the funds rate down to 0, as you know, we have taken a number of other measures, including the guidance of the forward-looking and large-scale asset purchases to speed up the pace of economic recovery, while meeting our inflation targets and maximize the employment objective.

When you see the expected Declaration, economic growth has pushed unemployment down. This estimate is very close to the participants. If growth levels are maintained for a long time, we expect the unemployment rate will drop slightly.

Now, we expected inflation will gradually revert to 2%, until 2018. 2017 figures very close to 2%. Even for next year is concerned, this is not a distant figure.

We are also very involved in the following factors--weak prices of imported goods and energy prices in the next year or so, which can dissipate. Acts should primarily be about inflation if our understanding of the inflationary process was correct, if inflation expectations are stable, too, I believe that they, along with the recovery of the labor market, as the treatment progresses we'll see rising inflation pressures, is what we expect.

Now the process was somewhat slow. Its characteristic is the lag, which is why the decline in the jobless rate even lower than normal levels for a long time, inflation returned to the 2% of the time needed for several years. This may take some time.

But low unemployment is helping it faster return 2%. It is of course important for us, I think our credibility depends on our inflation target, not only to deal with factors affecting the inflation threat, and we need to recover inflation in the medium term to 2%. We believe that the policies we follow is designed to achieve this objective. And would actually do it.

6, the Washington Post's Andy Herron (Elon): I would like to continue to discuss this issue. There was a time, Fed's pledge to keep interest rates low, then the critical value for 2.5% 6.5% unemployment rate and inflation rate. This leads to a hypothesis, that is more than the Fed thinks inflation rises to 2% is appropriate. But as you have said, you don't want to wait until inflation actually ready to raise interest rates after the goal is reached. Can you explain this. In how inflation is shifting, is the Fed actually is willing to accept?

Yellen: I'll make it clear. 2% is our goal. We would like to see inflation back to 2%, however, 2% is not a ceiling.

We don't want to push the inflation rate higher to more than 2%. Our goal has always been to return to 2%. But if it is a ceiling, you will have to implement policies for the average inflation rate of less than 2%. It is not our policy.

We hope to do all it can to get inflation back to the 2%.

However, the impact of monetary policy on the economy are lagging. If we wait until the inflation rate back to 2%, this may mean that the unemployment rate has dropped to well below our estimates, by then we just started--that is what you call a tightening of monetary policy. I don't think the word appropriate because we have imposed a mass of loose monetary policy. Let me say, this is just the beginning of the end of special degree of easing monetary policy. To the end of this policy. When the time comes, we are faced with inflation could significantly exceed the target of 2%. To do so, may have to take austerity measures could hurt the real economy. I don't think this is an ideal way to policy implementation.

7, Bloomberg smiley (Gina Smily). Your first premise there will always be some uncertainty to the global economy, but the global uncertainty does affect your ability to raise interest rates this month. What uncertainty preventing you from raising interest rates and what you can ignore and completely do not care?

Yellen: this is a difficult question. That's why we get together, on a variety of factors that is trying to assess why.

But in the end of the day, our focus is just two points. Road to employment. To bring us to the goal of maximum employment, we sure are. And to measure the risk of reaching this goal. Of course uncertainty surrounding this goal.

And we have reasonable confidence in inflation within the medium-term return 2%.

Through this filter, and we do, trying to find uncertainty. Of course, there are many uncertainties in the global economy. But we are also asking ourselves, the global economy in the economic and financial situation poses a threat to the two main objectives of risk. Regardless of whether it made the risk of imbalance, we wanted to wait for to solve the problem to a certain extent.

8, Fox Business Channel reporter bide·baensi (Peter Barns): can you talk about the specific meeting today to discuss foreign developments, please? What is your concern? We all thought it might be Chinese. Also mentioned in the minutes of a meeting in July. Are you concerned about slowing economic growth in China, and the China market? And your markets in Europe and the United States view of the stock market? …… Thank you.

Yellen: as far as the global situation, we discussed the development of all major regions of the world, but we are particularly focused on China and emerging markets.

Now, our long-term anticipation, and most analysts believe that, seen as China's economic restructuring balance, China's economic growth will be slow. In the context of their plans. I feel no need for this surprise.

Question is whether China could face other than most analysts had expected "slowed sharply" risks. I think we have seen movements in the financial markets in August, partly reflecting concerns about downside risks to China's economy, perhaps the policy makers can address these concerns. In addition, the market also worried oil prices on commodity markets pose a potential sharp drop in pressure.

These conditions had a significant impact on many emerging market economies, primarily those important commodity producers, also including Canada that in developed countries. Canada is our major trading partner, by the decline in commodity prices, energy prices had a negative impact.

Meanwhile, many countries are net importers of energy, these effects are positive for them. But major emerging-market economies adversely affected by these developments. We have seen large outflows of capital in these countries, their exchange-rate pressure, deepening concerns over its economic performance. Therefore, a large part we will focus on China's risk. But it's not only China and emerging markets more generally, how they may be United States spillover. When it comes to taking into account the financial situation and we react, I think a lot of the financial turmoil is true--so, we don't want real response to the market situation.

The Fed should not respond to the ups and downs of the market, and it certainly is not our policy to do. However, when there is a major financial developments, we have the responsibility to ask yourself what this is caused. Of course, if we cannot find a definite answer, we seem to think it's concerns about the global economic Outlook, driving volatility in financial markets.

Therefore, they are also part of our concern, because they allow us to see a global market, and how global markets will affect us.

Up to a point, you see, as I mentioned (the Fed) meeting held in intermission, we have seen a tightening of financial conditions.

The adjustment of stock market, coupled with a slightly stronger dollar and higher risk spread in the market, itself represented a tightening of financial conditions to some extent.

I want to say is, this is not the end of our policy. We must together fragments of many different thinking.

As I have stressed, we see the United States economy continues to perform well. The pace of job creation, as well as strong domestic demand, enough to impress us.

We have of course. Meanwhile, our global development situation and some degree of monetary tightening on United States adversely affected some concerns. We want to put all of this in a picture.

I think it is important, in our statement referred to, in addition to the above factors, we continue to balance the factors influencing economic and labour market. This is a complex puzzle, different currents pulsing intersection. Strengthening economic Outlook, some making trouble and problems. But overall, no significant change in Economic Outlook.

9, Reuters Anni·safeier (Anne Safire): in the face of the pressures of the global economic slowdown, United States economy has been growing. Are you concerned that, given the interlinkages among global economies, resulting in low inflation on a global scale, making it impossible to avoid a lower bound of zero interest rates?

Yellen: I would be very surprised if that is the case. And this is not me predicts the development prospects of the Committee. I cannot rule out such a possibility. But it really is an extreme downside risks, and forecast economic prospects far away from me.

10, Michael Mckey on Bloomberg radio and television: If the results of economic development as economic forecasting, you will see improvements in the labour market, but it will not rapidly fuel inflation, rate hikes this year so I was thinking what is the point of contention. For the proposed interest rate curve, because even taking into account the unchanged for a long time lag, within a few years at least, you cannot predict a could lead to steep, rapid changes in interest rate curve, in response to the inflation problem.

Yellen: If we are from now on, a long time maintained a high degree of monetary policy, as expected economic development, that is, economic momentum. I fear that the labor market will be more nervous than economic forecast bulletin is expected, and lag effect is likely to be slow. Eventually, we found significant beyond the inflation target. Then, forced into a stop-and-go policy cycle. We could push up the economy is overheating. And then to a sharp tightening of policy. Instead of slow, steady growth in order to improve the labour market. Then and continued improvement in the labour market, and gradually performed well. Economic and brakes at risk of recession, I don't think this is a very good policy.

11,News Maike·Debi of wires (Mike Derby): bitmap (a form of Fed rate expectations), one of your colleagues hope the imposition of negative interest rates. I totally didn't expect. This is a potential signal, how do you consider? If the Fed had to do more, in which negative interest rates will not include? I think it is in the Fed's Toolbox.

Yellen: Let me clarify, today, serious consideration of negative interest rates are completely out of our list. It's not on the main policy options. Of course, a participant in the Commission concerned about inflation prospects, believe that more easing is needed. Need extra stimulation, extra easy, suggested that interest rates were cut to negative. And we see similar in several European countries. But this is not the topic under discussion today.

I do not think that we will embark on a road of additional easing. However, if it happens I and most of my colleagues do not wish to see the prospect of change, finds economic weakness, additional stimulus is needed, and that we will see all of the available tools. When this happens, we will make an assessment.

12, AP keruisitingge (Marty Cretsinger): in July, you told us, I expect you will usher in the first rate hike by year's end. Did you expect to have to change it? When you talk about the situation in the financial markets and the August market turmoil when you talk about China and other issues. You also talked about the Fed's expected rate hike, if that is a factor?

Yellen: you ask is my expectation, I don't want to--I want to say on behalf of my Committee, and tried to explain the Committee's decision. We do not rate decision said who is this specific decision. I don't want to change that forecast, as well as my personal views to hike road.

You know, I think that the Commission's point of view is a very possible forecasts. If most people agree with this point of view, stated in the course of economic development required increased the federal funds rate, for example, later this year, I think this is an appropriate summary of the findings of the Committee.

You want to know my thoughts on our policy uncertainty?

13, (Marty Cretsinger asked): in fact, August's market turmoil, many people think that partly stems from concerns over us joint reserve is about to raise interest rates. The market turmoil, the reason you explained is not mentioned.

Yellen: I think the main factor contributing to instability are worries about the Outlook for the global economy. This is my interpretation. I know the Fed policy uncertainties. As I mentioned, we all took note of today's rate decisions have a huge amount of attention. I want you to know that we must take into account the economic and financial situation in the undercurrent to make a proper decision path. We have no policy adjustments every day. We periodically the party together, to the best analytical insight to make the best possible decisions, and exchanging opinions, until a resolution is reached. I understand in the sidelines of a meeting, in order to understand resolution, each Member of the FOMC's interpretation of each sentence will be chewed. I think it is very unfortunate.

As far as I understand, I think it's natural. At some point, because the policy to be revised, the market may decline. This is a natural thing will happen. Indeed to some extent increased uncertainty in the financial markets.

14, Michelle Ferry BBC News: you talk a lot about the strong dollar, I don't know what do you think of the Fed's policy impact on the dollar? Consider this factor in your decision?

Yellen: the United States monetary policy serving the goals Congress set. When tighter monetary policy and higher interest rates, whether real or expected to come. Global interest rates will induce capital affected by exchange rate movements.

Therefore, monetary policy often has some effect on designated. And in my opinion is not the main channel of monetary policy operations. It is one of the monetary policies play a role in a number of different channels. Monetary policy on exchange rates do have a certain degree of influence is a factor we have to consider.

15,MarketWatch geleige·gaipu (Greg Rap): I would like to know if you can change a little bit, about the real estate market. You said in a statement that the housing market has improved. The extent to which you rely on real estate market-driven economic growth? Especially since the Committee believes that interest rates will rise? Thank you.

Yellen: we think the housing market will be further improved. It is still a depression. Housing starts lower than expected matching data for demographic data-especially when the economy to create jobs, we have a lot of people in a State of housing and demand for housing. In the case of jobs and income growth, people are supposed to achieve this requirement.

We rely on real estate growth? Housing now is the United States a very small sector of the economy, it's not the driving force--in my own prediction, it is not a United States economic development a key factor. It plays a secondary role.

With the bright prospects of investment spending driven by consumer spending, was the main driving force. I will continue to expect housing improvements. Keep in mind that we envisage is that things over time and we expect perfect gradual road development--continued to increase in short-term interest rates, has meant that long-term interest rates in part on changes.

The other hand, as time goes on, we will remove the window period with zero short-term interest rates, long-term rates rise in nature. Of course, we recognize that the housing market is very sensitive to mortgage rates. Consider appropriate policy path, which is clearly a factor to be considered.

16, (geleige·gaipu further questions): you mentioned that you hear from people outside a number of bold proposals, but another voice was that the Fed should raise interest rates, because for a long period of low interest rates, actually exacerbates the gap, do you think that the Fed's low interest rate policy has expanded the gap? Many people believe that low interest rates mainly benefit the rich.

Yellen: I think I really do not see it that way. Interest rate effects on asset prices, but its impact on liabilities and assets are complex. I think that loose monetary policy the main use is to get people back to work. Clear income gap in high unemployment and weak job market conditions worsened the situation for the most vulnerable individuals will have the most negative impacts. For me, get people back to work, see labor market strength, to most vulnerable groups of the population have a favorable impact, not in increasing income inequality.

Recently, the monetary policy affects a large number of studies show that, through different mechanisms of transmission mechanisms, (monetary policy) is to improve income inequality. There has been much speculation, and different modes of analysis can come to different conclusions. But recent studies concluded that overall conclusion is that the Fed's policies do not exacerbate income inequality.

17,Politico John Taylor: If today (budget) decisions led the Government to shut down, the Fed will say anything to develop this strategy with lawmakers?

Yellen: this is not our duty. I believe it is the responsibility of Congress: pass a budget, to finance the Government's debt ceiling, United States to pay the Bills.

Now economy is restored to health, is improving, seeing Congress take action would endanger the progress, I feel very sorry. But this is the work of Congress. Congress ordered according to the medium-term economic prospects, the adoption of appropriate policies. This is what we have done in the past, and will continue to do so.

18,MNI shitifu·beikena (Steve Beckner): you pointed out in your opening statement, are giving up on the maintenance of a large balance sheet of the Federal Reserve, began to avoid continued use of investment and new loans against old debt practices. But you can delay raising interest rates, logically increases your supported easing the stance of monetary policy. Also delayed the plan to reduce your balance sheet?

A year ago, FOMC said, until he began to raise the federal funds rate, it will not begin to shrink its balance sheet. So, do we want to worry you are postponing the normalization of the balance sheet? Do this is you and your colleagues to discuss the issue? Thank you. SFC opening external funding tickets: four futures

Yellen: July meeting minutes said, we have discussed investment strategies. Our normalization principle says that we will not begin to reduce or eliminate dividends reinvested, until you have to start raising interest rates. In principle, the exact timing will depend on the economic and financial situation, as well as our assessment. This guiding principle is still accurate.

We did not do any further action in that regard. We have been committed to reducing the balance sheet, but to wait until after the normalization of operations began.

From the point of view of stimulus, if we delay, it's not a big problem.

But what you said is correct to a certain extent--if we postpone raising interest rates is likely to delay the process start time.

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