Thats why our founders and their infinite wisdom set it up this way about thats our role and responsibility under the constitution, were going to fulfill it we appreciate your doing your jobs and we thank you for your time. This committee stands adjourned. Screeria nigeria. Here on cspan3 we show you Congressional Affairs hearings, on weekends cspan 3 is the home to American History tv. Six unique series the civil wars history. History bookshelf, the best known American History writers, the presidency. Lectures in history with top college professors. Our new series featuring archival government and educational films through the 1930s and 70s. Cspan 3 created by the cable tv industry and created by your local cable and satellite provider. Janet yellin testified last week before the House Financial Services committee, defending the feds Monetary Policy, and reemphasizing the fact that Interest Rates are likely to go up later this year. Congressman jeb henzerling chairs the committee. Committee will come to order, without objection the chair authorizes a recess, the hearing is for the purpose of receiving the semiannual testimony of the chair of the governors of the Federal Reserve system and the state of the economy. I recognize myself for three minutes to give an opening statement. Last week this committee began a series of hearings examining the dodd frank act on its fifth anniversary. It expanded the powers and reach of the Federal Reserve beyond its traditional Monetary Policy role. In historically unprecedented ways. The evidence continues to moubt that since the the passage of dodd frank is less stable, less prosperous and less free. We continue to be mired in lackluster halting Economic Growth. Middle income paychecks are nearly 12,000 less compared to the average post war recovery. And is the Ranking Member miss waters told us just a few months ago. The brutal truth is millions continue to teeter on the brink of poverty and collapse. One way our economy could be healthier is for the Federal Reserve to be more predictable. The fed followed a more clearly communicated and understandable and predictable convention or rule. Too often this leads to investors and consumers being lost in a hazy mist. One former fed president has written policy creates inefficiency. The fomc gives lip service to policy predictability its statements are vague it is Data Department but will not tell us what data and how with the power to amend it or deviate from it in no way interferes with the feds Monetary Policy independence. Next we in congress would be grossly neglect if we did not engage in engage in oversight. Dodd frank confers sweeping new power. Completely separate and apart from its traditional monetary pull. The fed continues to shield them through monetary independence. The fed has employed historically unprecedented methods, to paying interest on excess reserves, to keeping Interest Rates near zero for almost 7 years. By doing so, the fed has certainly blurred the lines. The fed has recently crossed the line by willfully ignoring a lawful congress ap subpoena for documents. This is inexecutivible. It cannot be allowed to stand. The feds refuseal to cooperate threatens both its reputation and its credibility. The fed is not above the law. Its a very serious matter, and must be resolve edd. The share now yields to the Ranking Member for three minutes. Welcome back. Im pleased to hear this month we commemorate the dodd flank reform act. It was signed into law just as we had emerged from the worst economic collapse in a generation. One which destroyed nearly 16 trillion in Household Wealth and 9 million jobs. This placed 11 million americans from their homes and doubled the Unemployment Rate. Since those dark days, weve seen improvement. Dodd frank made significant progress correcting the practices that help lead us to the crisis. It has delivered billions to victimize consumers, Greater Transparency to the once opaque banking practices that have caused the crisis and put in place clear rules of the road. Accommodation has led to growth. Unemployment falling to its lowest rate. Recovering Housing Market and significant increaseing in 401 k balances and the s p 500. These improvements do not paint a picture of an economy that has fully recovered, the gap between communities of color and women versus their white male counterpart remains dramatic a lack laughter First Quarter coupled with instability and slowing growth abroad have sat momentum for job creation and economic expansion here at home. I hope the board of governors will continue its slow and cautious approach to raising Interest Rates. Chairman yellin, as you know, raising Interest Rates is not in itself create a Strong Economy. It is a Strong Economy that must be the impetus for raising rates. With inflation continuing to hold near zero and numerous indicators of slack in the labor market, its my hope that the Federal Reserve will fully consider the impact of any potential Interest Rate increase on the middle class, and those communities that have yet to benefit from the economic recovery. So i thank you again chair yellin and i look forward to your testimony here today. And i yield back the balance of my time. The chair now recognizes the gentleman from virginia, mr. High zinga for two minutes. Up over here. Thank you for honoring my request to meet last month. Why the development of these policies are in desperate need of transparency. The feds recent high degree of transgression in how it conducts Monetary Policy suggests that reforms are needed. Continue to encourage the Federal Reserve as you know to adopt the rules based approach to Monetary Policy and communicate that rule to the public. The fed must be accountable to the Hardworking Taxpayers themselves. The last professor of Carnegie Mellon university testified that over the first 100 years of the Federal Reserves history, policies operated more effectively if it honors simple and clearly understood rules. There are only two periods in Federal Reserve history where they came close to operating under the rule. That happened to be the best two periods in fed history. In 1923 to 1928 and 1985 to 2003. They operated under some form of the gold standard. In the second, under the taylor rule. Those were the two, and the only two periods in federal history that have low inflation, relatively stable growth, 1345u8small recessions. I ask that you work with me and this committee to develop a foundation for a rules based Monetary Policy that will properly not slavish to borrow a phrase constrain the feds discretion without sacrificing the proper independence the fed has, allowing the fed to be more transparent in formulating and communicating Monetary Policy, to not only market participants, but also to the American People thank you, mr. Chairman, and i yield back the balancing of my time. Thank you so much, mr. Chairman. I am so happy to welcome you back i look forward to your testimony, to the q a period, and i think this committee will benefit from your strong background in economics. Were of course in the midst of a strong twoyear job growth but i have some concerns. You talk about slack in the labor market. It seems to me that that slack is disproportionately born by africanamericans and latinos. This brings me to the critical importance of the full employment part. While were plotting upwards. Theres many storm clouds. I want to see growth which will create jobs and decrease the National Debt. Now, i cringe at the austerity policies of this republican congress, i think it works at cross purposes with your pro growth policies. I want to hear you talk about that. Your predecessor came to congress and told us the sequester and the shutdown were examples of counter productivity. We want to give this slack as you call it out of the labor market. But Congress Needs to embrace growth policies that will help working people. Wall street is doing just fine. But we need to invest in education and infrastructure increase the minimum wage, so we can get more consumers spending money. And you know i read in your testimony here that the u. S. Exports are slumping yet this committee has refused to reauthorize the export import bank. These are unforced errors and i thank you and look forward to hearing your testimony. I yield back the balance of my time. The gentle lady yields back. Today we welcome the testimony of the honorable janet yellin. Chair yellen has previously testified before our committee. I believe she needs no further introduction. At the request of the chair i wish to inform all members i intend to adjourn the hearing at 1 00 p. M. This afternoon. Claire yellin, without objection, your written statement will remain a part of the record. You are now recognized for five minutes to give an oral presentation of your testimony. Thank you for being here. Thank you. Ranking member waters and members of the committee im pleased to present the Federal Reserves semiannual Monetary Policy report to the congress. In my remarks today i will discuss the current skpek discussion situation in outlook, before turning to Monetary Policy. Since my appearance before this committee in february inflation has continued to run below the level. To be most consistent over the federal run to promote maximum employment and price stability. The Unemployment Rate stands at 1. 3 . Slightly below its level at the end of last year, and down more than 4 1 2 Percentage Points from its 10 peak meanwhile, monthly gains and nonfarmed Payroll Employment averaged about 210,000 over the first half of this year. Somewhat less than the robust 260,000 average seen in 2014. Its still sufficient to bring the increase in employment since its trough to more than 12 million jobs. The number of people suffering long term unemployment these measures as well as the Unemployment Rate continue to indicate theres slack in labor markets. Too many people are not searching for a job. But would likely do so if the labor market was stronger. Although there are attentive signs, it continues to be relatively subdued. Consistent with other indicators of slack market continues have improved substantially. They are not yet consistent with maximum employment even as the labor market was improve inging real gdp is now estimated to have been little changed in the First Quarter after having risen an average annual rate of 3 1 2 of the second half of last year Industrial Production has declined a bit in balance since the turn of the year. These developments bear watching, some of the sluggishness seems to be the result of trans tory factors. Including unusually severe winter weather, labor disruptions at west coast ports and statistical noise. Notably, Consumer Spending has picked up and sales of motorcycles in may and june were strong suggesting that both the households have the wherewithal to purchase items. The demand for housing is still being restrained by limited availability of Mortgage Loans to many potential home buyers. Business investment has been soft this year, partly reflecting the plunge in oil drilling, and net exports are being held down in several of our Major Trading partners and the appreciation of the dollar looking forward prospects are favorable for the u. S. Labor market and the economy more broadly. Low oil prices in ongoing employment gains have continued to bolster consuming spending. Financial conditions generally remain supportive of growth in many the highly accommodative monetary policies abroad should work to strengthen global growth. In addition some of the head winds including the effects of dollar appreciation on net exports and the effect of Lower Oil Prices on Capital Spending should diminish over time. As a result the fomc expects gdp growth to strengthen over the remainder of this year and the Unemployment Rate to decline gradually. As always, there are some uncertainties in the Economic Outlook. Foreign developments in particular pose some risks to u. S. Growth. The recovery in the euro area appears to have gained a former footing, the situation remains difficult china continues to grapple with the challenges posed by high death and volatile Financial Condition ss Economic Growth abroad could pick up more quickly, providing Additional Support for u. S. Economic activity. The trans tory influences holding down first half growth and the boost to Consumer Spending from oil prices shows through more definitively. As i noted earlier inflation continues to run below the committees 2 objective. With the personal consumption expenditures, up only a quarter of a over the 12 months ending in may and the core index which excludes the volatile influence over the same period. The recent low meetings reflect influences that are likely to be trans tory particularly the earlier steep declines in oil prices and in the prices of nonenergy imported goods indeed Energy Prices appear to have stabilized recently. Although monthly inflation reitings have firmed lately. The change in the index is likely to remain near its recent low level in the near term. My colleagues and i continue to expect that as the effects of these trans tory factors dissipate, and as the labor market improves further inflation will move gradually back to our 2 objective over the medium term market compensation remain low, they have risen some from their levels earlier this year and survey based measures of longer term inflation have remained stable the committee will continue to monitor inflation careful ly carefully the fomc conducts policy for price stability as required by our stat tory mandate from the Congress Given the Economic Situation i just described, the economy is judged at a high degree of policy accommodation remains appropriate. Consistent with that assessment weve continued to maintain the target range for the federal funds rate at zero to a quarter , and have kept the Federal Reserves holding ss at their current level to help maintain accommodative conditions. In its most recent statement the fomc again noted that it judged it would be appropriate to raise the target range for the federal funds rate, when it is seen further improvement in the labor market, and is reasonably confident that inflation will move back to its 2 objective over the medium term. Depending on its assessment of realized and expected progress for its objectives of maximum employment and 2 inflation if the economy evolves like we expect. Economic conditions would make it appropriate to raise the federal funds rate target. There by beginning to normalize the stance of Monetary Policy most participants in june projected an increase in the federal funds target range would likely become appropriate before year end. Let me emphasize again that these are projections based on the anticipated path of the economy not statements of intent to raise rates at any particular time. A decision by the committee to raise its target range for the federal funds rate will signal how much progress the economy has made in healing from the trauma of the financial crisis. That said the importance of the initial step to raise the federal funds rate target should not be over emphasized. What matters for Financial Conditions in the broader economy is the entire Interest Rates. Not including the initial increase in the federal funds rate. Indeed the stance will likely remain highly accommodative for quite some time after the first increase in the federal funds rate in order to support continued progress toward our objectives of maximum employment in 2 inflation the projections prepared for our june meeting, most fomc participants participated that Economic Conditions would evolve over time in a way that will warrant gradual increases in the federal funds rate as the head winds that still restrain real activity continue to diminish and inflation rises. If the expansion proves to be more vigorous and inflation moves higher than expected. The appropriate path would likely follow a higher and steeper trajectory. Conversely, if conditions were