January the committee saw data that led it to be quite a bit more optimistic about the economic outlook. So i would say incoming data since january when our statement sounded quite an optimistic tone partly down due to weather and partly down because we probably overdid the optimism inform january, so in some sense our views have moved around here a little bit, but if we take december to march, committees views are largely unchanged. Youve served on the fed previously. Im wondering now in the past few weeks as chairwoman, whats been different about being on the fed and your responsibilities as chair compared to being just a board of governor member . Well, thanks. I feel im very lucky that ive had a lot of fed experience to draw on as i approach this role because its complicated and now in many ways i feel the buck stops with me in terms of management of the fomc and responsibility to assure that the Federal Reserve makes progress on its goals of getting the economy back on track and making progress on our Financial Stability and regulation objectives. So i feel that weight of responsibility keenly in the new role i have, and i am very committed to making sure that i provide the leadership thats necessary for the Federal Reserve system to move forward on these goals. But in terms of the conduct of business, its pretty much the same as usual. Im not envisioning nor have there been so far any radical changes in how the Federal Reserve does its business, and that includes operating the fomc. Robin harding from the financial times. Madam chair given the new guidance doesnt give any information about how you will trade off your unemployment and inflation objectives, doesnt actually give us any information, how will you trade off the risk of higher inflation versus faster progress on unemployment as you get closer to full employment . Thank you. So id say so far we havent had that tradeoff to make because inflation is running well below our objective, and by any measure there remains substantial slack in the labor market. So tradeoffs and worrying about doing more or less because we have conflicting objectives, this really has not been an element in our discussions about how to be conducting policy now. As we get closer to meeting our goals, it could become it could become an element, and i would say that weve given guidance in the statement, and we gave perhaps more guidance in our socalled consensus statement or statement of longer run goals in Monetary Policy strategies that weve now reaffirmed for three years in a row, that the committee would take a balanced approach in situations where our objectives conflict and were faced with tradeoffs between inflation and unemployment. When we first put our thresholds into effect, we envisioned the possible situation where such a tradeoff could arise. Where we might face a situation where unemployment was quite high, namely over 6. 5 , and inflation might be drifting close to 2 or even a little bit above 2 . And our threshold base guidance gave some more concrete indication that we would tolerate inflation running a little bit over 2 with unemployment sufficiently high before moving the federal funds rate off zero, and to the extent that that concrete guidance is useful, i dont believe thats a situation that were likely if i thought that that was the situation we were likely to encounter in the next several years, we probably would have revised our forward guide nenan a different way. We revised it as we did because it doesnt seem like a situation thats at all likely. But i would point you to the statement, the final statement in this statement that says that the fomc does not see this guidance as indicating any change in our policy intentions, and i would include how we would make tradeoffs between our inflation and employment objectives if we were to face that situation. Ann with reuters. First, i just wanted a quick clarification. You said that something would happen by next fall and we are on a path until next fall. I was unclear if you were speaking of rate hikes or if you were speaking i simply meant to say that if we continued to reduce the pace of our asset purchases in the manner that we have in measured steps, that the program would be winding down next fall. In this coming fall you mean, not the fall of next year. Yes, this coming fall. To be clear. Just wanted to be clear about that. Once you do wind down the bond buying program, could you tell us how long of a gap we could expect before the rate hikes do begin . So the language that we used in this statement is considerable period. So you know, this is the kind of term, its hard to define, but, you know, probably means something on the order of around six months, that type of thing, but it depends what the statement is saying, it depends what conditions are like. We need to see where the labor market is. How close are we to our full employment goal . That will be a complicated assessment, not just based on a single statistic. And how rapidly are we moving toward it . Are we really close and moving fast . Or are we getting closer but moving very as low as slowly . And then what the statement emphasizes and this is the same language we used in december and january, we used the language especially if inflation is running below our 2 objective. Inflation matters here, too. And our general principle tries to capture that notion. If we have a substantial shortfall in inflation, if inflation is persistently running below our 2 objective, that is a very good reason to hold the funds rate at its present range for longer. The committees vice chairman bill dudley said recently if the economy decided it was going to grow 5 for the economy decided they it wouldnt grow at all those would be the kind of change that is would warrant the changing of tapering. Theres a lot of Research Showing that shortterm unemployment seems to be responsible for the level of inflation and that longterm unemployment seems relatively uncorrelated. Is that the feds view at this point. Is that one reason you expect inflation to rebound in the next couple years . So i think the numbers you cited would be extremes in terms of defining what wed need to see. I wouldnt go to such extremes. I guess the way i would put it is this, there are two conditions for the committee to decide to have continue tapering the pace of purchases. The first is that we need to assess that the labor market continues to be on the mend and we feel reasonably satisfied that the outlook is for further improvement in the labor market that will get us back to our maximum employment objective, and, second of all, we need to see now coming back to inflation again, inflation is low, and its been running well below our objective, and we need to see evidence that leaves us feeling satisfied that inflation will move up over time, that we believe the evidence is consistent with its moving up over time. If the committee no longer feels comfortable making such assessments, so if there is enough change in the data were seeing about the economy that it no longer seems reasonable or convincing to make those two separate assessments, then the case has been made to change the pace of asset purchases and to deviate from the current plan. So 5 , 1 , those are very extreme numbers, but i would want to feel confident in making those two statements about the labor market and inflation. With respect to the issue of shortterm unemployment and its being more relevant for inflation and a better measure of the labor market, ive seen research along those lines. I think it would be tremendously premature to adopt any notion that says that that is an accurate read on either how inflation is determined or what constitutes slack in the labor market. So i think this is something our committee will be looking at, especially as unemployment goes down and other labor market indicators hopefully simultaneously improve. Well be looking at a broad range of indicators. Were looking to see progress on many different dimensions where we see slack in the economy, but i wouldnt endorse and i certainly dont think our committee would endorse the judgment of the research that you cited. Jeff kerns from bloomberg news. You have spoken in the past about thinking back to march of last year of how you supplement your view of the labor market beyond unemployment with other gauges like quit rates and layoffs and thing like that. How is your dashboard evolved in the past few months in terms both of the which indicators you like to watch most and also in terms of the quality of data that you think, whether its positive, negative, that youre getting from these indicators . Thank you. So i have talked in the past about indicators i like to watch or i think that are relevant in assessing the labor market. In addition to the standard Unemployment Rate, certainly look at broader measures of unemployment. I mention ed 06 in my statement. 5 of the labor force working parttime on an involuntary basis, thats an exceptionally high number relative to the measured Unemployment Rate, and so to my mind its a form of slack that is adds to what we see in the normal Unemployment Rate and is unusually large. However, it is coming down as well as u3. Its moving in the right direction and has moved even more recently than u3. Of course, i was discouraged in morni marginally attached workers. The sheer can be immensely high and can be stubborn in bringing down. Thats something i watch closely. Again, that remains exceptionally high but it has come down from Something Like 45 to high 30s, but thats certainly in my dashboard. Labor force participation. I do think most Research Suggests that due to demographic factors, Labor Force Participation will be coming down, and there has been a downward trend now for a number of years. But i think there is also a cyclical component in the fact that Labor Force Participation is depressed, and so it may be that as the economy begins to strengthen, we could see Labor Force Participation flatten out for a time as discouraged workers start moving back into the labor market, and so thats something im watching closely, and the committee will have to watch. There are different views on this within the committee, and its hard to know definitively what part of Labor Force Participation is structural versus cyclical. So its something to watch closely. I have also mentioned in the past measures of labor market turnover. You mentioned quits. Remarkably large share of workers quit their jobs every month. Usually going directly into another job, and i take the quit rate many ways as a sign of the health of the economy. When workers are scared, they wont be able to get other jobs, they show a reduced willingness to quit their jobs. Now, quit rates now are below normal prerecession levels, but on the other hand, they have come up over time, and so weve seen improvement. The job opening rate has also come up. The hires rate, however, remains extremely depressed, and i take that as a sign of weaker labor market. But most of these measures, although they dont paint the identical extent of improvement, if you ask about my dashboard, the dial on virtually all of those things is moving in a direction of improvement. The final thing id mention is wages, and wage growth has really been very low. I know there is perhaps one isolated measure of wage growth that suggests some uptick, but most measures of wage increase are running at very low levels. In fact, with productivity growth we have and 2 inflation, one would probably expect to see on an ongoing basis something between perhaps 3 and 4 Wage Inflation would be normal. Wage inflation has been running at 2 . So not only is it depressed signaling weakness in the labor market, but it is certainly not flashing. An increase in it might signal some tightening or meaningful pressures on inflation at least over time, and i would say were not seeing that. Madam chair, Wyatt Andrews from cbs. For tens of millions of american the recovery is an awful long time coming. May we know your thoughts on why the recovery is so slow and why the economy is not creating more jobs. I think the short answer is that weve lived through a devastating financial crisis that has taken an exceptional toll on the economy in many different ways from housing to leaving a huge number of homeowners with mortgages, living in homes with mortgages that are under water. Has had a highly negative effect on their Credit Ratings and their ability to access credit. Has left businesses with very cautious attitudes that we see in Business Investment spending that is very restrained. On top of that, weve had weakness in the global economy, and weve had a very tight fiscal policy at home after stimulus at the onset of the recession, weve had a good deal of Fiscal Consolidation in the United States, and at a time when fiscal policy normally in the past would have been serving to create jobs, fiscal policy from that standpoint has served as a headwind to the recovery and especially at the federal level, but also at state and local levels as well, and so we have had a disappointing recovery, and Monetary Policy has tried to do what we can to offset that, but, you know, the linkages arent as strong and arent as quick as we might ideally like them to be. Thank you. Id like to take you back to last summer when there were hints the fed made hints they were going to taper and longterm Interest Rates spiked, Mortgage Rates rose. What lessons looking back at that period, what lessons have you learned from it and are you confident that you wont repeat that those mistakes again . Well, i think there were quite a number of things happening at that time. I think its probably true that Monetary Policy may have played a role in touching off that Market Reaction, but i think the Market Reaction was exacerbated by the fact that we had a very significant unwinding of carry trades and other leveraged positions that investors had taken perhaps thinking that the level of volatility was exceptionally low, perhaps lower than was safe for them to have assumed. But we certainly saw now, in some ways the fact that Interest Rates have come up somewhat, although it has had a negative effect on the recovery and thats evident in housing in the slowdown in housing, perhaps its diminished some financial instability risk that may have been associated with these carry trades and speculative activities that were unwinding during that time. A lesson is that we will try, and we were trying then, but we will continue to try to communicate as clearly as we possibly can about how we will conduct Monetary Policy and to be as steady and determined and transparent as we can to provide as much clarity is reasonably certain given the economic developments in the economy are themselves uncertain, but we will try as hard as we can not to be a source of instability here. Thank you. Madam chair, rebecca jarvis, abc news. One of the drivers last spring and summer of home prices and home sales was that sense that Interest Rates were going up, that they were spiking, and now a year later were looking essentially at a flat Interest Rate picture as far as home buyers are concerned. So is there any sense on your committee that staying at this level loses its punch the longer we remain here and if im a buyer and im thinking about going out and buying a home, why should i do that today as opposed to waiting a few more years or even months before Interest Rates then do go up . Well, i think the level of Interest Rates remains low by historic levels, and the level of household formation is very depressed, has been very depressed for some time. There are a lot of kids who are shacking up with their families and probably would like to be going out and acquiring places of their own whether its an apartment or a home. Theres a lot of demographic potential there for new household formation that would ultimately generate new construction either single or multifamily, and the level of rates i think does matter, and the fact that theyre low now i think is something that should serve as a stimulus to people coming back into the Housing Market, and where weve not yet seen a pickup after the lull after Interest Rates went up last summer, i do expect housing activity to begin to expand more rapidly later on. I dont think its only the expectation that i have to move now or things will be more expensive later that spurs those decisions. Kate davidson from politico. Much has been made about the fact that you and your predecessor agreed on many policies, you shared a lot of the same policy views. Can you tell us one way in which your chairmanship will be than Ben Bernankes . Well, i think we are committed to exactly the same set of goals, and, you know, as i indicated, my goal, and i will, you know, throw myself into this as wholeheartedly as i can, is to make rapid progress, as rapid progress as we possibly can in getting this recovery back on track and putting americans back to work and into jobs and in moving inflation back up to levels that are at the committees target of 2 . My predecessor was also devoted to that. Strengthening the Financial System is a work in progress, and he made large inroads in strengthening the Financial System. I just say theres more work to be done, have a long todo list. I would absolutely its high priority for me to see further work done in addressing too big to fail. We have a todo list of things we want to accomplish, and in assessing threats to Financial Stability because neither one of us and no one wants to live through a financial crisis lik