Zero is a concern and we have less scope than i would like to see or expect us to have in the longer run. Now, i think it would be worthwhile for other policymakers to think about what role they could play in addressing negative shocks should they come, and i mentioned specifically automatic stabilizers because i think thats an important way in which fiscal policy serves to cushion shocks to the economy. And it would seem to me, without getting into specifics, that there are ways in which the response of fiscal policy to shifts in the economy could be strengthened, which would help take some burden off Monetary Policy. In the runup to the brexit vote earlier this year, several fed policymakers cited it as a reason they were reluctant to raise rates in june, because of the uncertainty related to that vote. In the runup to the president ial election, i havent heard the feds say that as a reason they might not raise it in november. Can you tell me why the brexit is a greater threat to the economy than the president ial election happening here . Also, there were three ascents to this meeting. Can you explain what the opposition was . What is the right policy to foster our goals, were speaking of that, and im not going to get into policy goals. Those are factors we dont consider and im not going to get involved in commenting on the election. In terms of dissents, the notion that we have some accommodation that if we continue on the current path, its something we will need to remove over time. There is general agreement among participants on that. But the precise timing of what is the right timing for removing that accommodation is something on which we had active discussions, and there are a range of opinions. And the dissents represent a judgment on the part of some of my colleagues that its important to begin that process now. I certainly agree, and ive said myself, that there are risks in waiting too long to remove accommodation. We need to take a forwardlooking approach. Ive always advocated making policy based on forecasts of where the economy is heading and taking account of risks. And there are two particular risks that we need to think about and balance. One is the risk that the economy runs too hot, that employment falls to a too low level, that we need to tighten policy in a less graduated way than would be ideal. At the risk of doing that, because that is a very difficult thing to accomplish, to gently create a bit more slack in the labor market, we could cause a recession in the process. And so thats something my colleagues and i certainly wouldnt want to be responsible f for. We would like to have an expansion of a labor market to operate for many years to come, and the prospect that we could create Downside Risk for the labor market is something we would like to avoid. And taking a stitch in time might be essential to avoiding that. On the other hand, inflation is running below our 2 objective and its also important to make sure we get back to 2 . I have routinely indicated a number of measures of Inflation Expectations that are running at the low ends of their historical range and were watching that as well. And there would also be risks from not seeing inflation move back to our 2 objective. And exactly how to balance these two risks, which is more serious, which is a more serious risk, can affect ones judgment about the appropriate timing. And were all struggling to understand the magnitude and nature of those two risks. Rebecca and then well go to nancy. Rebecca jarvis, abc news. Chair yellen, at a time when the public is losing faith in many institutions, did the foc discuss the importance of today as an opportunity to dispel the thinking that the fed is politically compromised or beholden to markets . The Federal Reserve is not politically compromised. We do not discuss politics in our meetings. I cant recall any meeting that i have ever attended where politics has been a matter of discussion. I think the public, if they had been watching our meeting on tv today, would have felt that we had a rich, deep, serious, intellectual debate about the risks and the forecast for the economy. And we struggled mightily with trying to understand one anothers points of view and to come out at a balanced place and to act responsibly, and thats my commitment to the American People that i want to lead an institution that is not political and is we are striving to do our very best to pursue the goals that congress has assigned to us, which are important ones of price stability and maximum employment. Does it concern you, given what donald trump has said at this point about the Federal Reserve that he could go back if he were president and look at the minutes and look for signs of the fed being politically motivated and find them . I have no concern that the fed is politically motivated, and i will assure you that you will not find any signs of political motivation when the transcripts are released in five years. We i it is important that we maintain the confidence of the public and i do believe that we deserve it. I know that these are difficult decisions, and everybody may not agree with them, but i hope the public will understand that were striving to do our best to pursue these goals that do matter to all of us. Nancy marshall with marketplace. You mentioned a commercial real estate. Are you worried that bubbles could form in the economy because of our prolonged low Interest Rates . Yes. Of course, we are worried that bubbles could form in the economy, and we routinely monitor asset valuations. While nobody can know for sure what type of valuation represents a bubble, thats only something one can tell in hindsight. We are monitoring these measures of valuation and commercial real estate valuations are high. Rents have moved up over time, but still valuations are high relative to rents. And so it is something weve discussed. We called this out in our Monetary Policy report and in other presentations, and we are in our supervision with banks, as i indicated. We have issued supervisory guidance to make sure that underwriting standards are sound on these loans, and were aware this is something also that we look at in stress tests of the larger banks to see what would happen to their capital positions and to make sure they hold sufficient capital. Of course, i think the soundness and state of the Banking System has improved substantially, but of course we are focused on such things. Chair yellen, over here. Hi. A quick question on regulation and the scandal at wells fargo over phony customer accounts. I know there are other regulators that have looked into this, but you are also a regulator of wells fargo. Has the fed opened a separate investigation into these practices at wells fargo . And wouldnt you, because they do involve issues of consumer protection, potentially of Risk Management and corporate governance, are you looking at them broadly across the Banking System right now . So in this specific case, the abuses that took place in the national bank, the controller of the currency has responsibility there. And on the consumers side, it is the cfpb that has responsibility. But we work cooperatively and closely with those organizations, and in terms of our overall supervisory responsibility for wells and other Large Banking Organizations, we are very focused and this will be a particular focus of our supervision. Going over the compliance environment to make sure that the controls of senior management, oversight of the involvement of the boards of directors are appropriate to control these kinds of risks. We have been distressed to see banking organizations and what we really want to see are robust procedures to see that employees are always acting in a legal and ethical manner, and that the incentives that are put in place in these organizations are appropriate and dont serve to foster behaviors that could harm the public, and this has been and will be a focus of our supervision. Weve seen policymakers begin to have serious discussion about tariffs in the last several decades. If tariffs were to be enacted in the coming year or so, does the fed have an opinion on what that would do to growth in america . You know, thats a political issue thats currently being debated that i really dont want to get into. Im going to pass on that one. Hi, john heltman with american banker. Back to the question about wells or related to wells. One of the concerns that has been raised that this scandal has raised is the bank itself says it doesnt know what was happening, and there were thousands of employees that were involved in this. Some are calling for a breakup, saying that the banks are too big to manage. Do you think that leaving aside the question of wells specifically, do you think that its possible for a bank to get so big that it cant be managed and that perhaps the best prudential step would be to break it up . So we have High Expectations for what we expect to be in place in a Large Banking Organization or any organization. We expect there to be robust systems of management, strong order functions, a board of directors that is monitoring and supervising and Holding Senior management accountable for things that happened throughout the organization in a strong compliance environment. I dont think that these are impossible standards to meet. They may be challenging, but at this point i wont arrive at the conclusion that just because an organization is large, it cant live up to those standards and those are our expectations and we intend to hold banking organizations responsible for being put in that kind of compliance environment. So im not endorsing a general conclusion that banks are too big to manage. They can be. It may be challenging and thats what we expect. Eric, madam chair, thank you. I have a question about the trajectory in the doc plot. While there is currently a large range, the idea is for the fed to raise twoquarters of a point in 2017, and a further twoquarters of a point in 2018 to bring us to twoquarters of 3 in the long run. At the same time, the median forecast for gdp growth is 2 for the next two years and 1. 8 thereafter. And i should add the most optimistic projection is for growth of just 2. 5 of all the projections outlined here. So if Economic Growth is going to be that slow for that long, w where will the Inflationary Forces emerge that would require tightening of 250 basis points from where we are now, and if not inflation, is there some other explanation . So the projections, i agree the projections for growth are slow. We have further written down our estimate of the longer run normal growth rate. And what that reflects is an assessment that productivity growth is likely to remain low for an extended period of time, although it doesnt have an expectation that it will pick up from the miserable half percent rate wii seen over the last five years. Slow growth is a factor. Slow productivity growth is a factor that influences the longer run normal level of Interest Rates and writing down the likely pace of productivity growth is one factor that is responsible for the downward shift in the path that you see for the federal funds rate. Thats an important reason for revising down the neutral rate. But now lets go to your the part of your question about inflation. In spite of having such slow growth, disappointing productivity growth, we have a labor market that last year generated an average of about 230,000 jobs a month, and so far this year has been generating about 180,000 jobs a month, and that is a very solid pace of job growth and a pace that likely is not sustainable in the longer run, although weve been pleased to see people come back in the labor market, so it certainly is sustainable for some further amount of time. But i think what ultimately drives inflation, both wage and price growth, is that tightness in the labor market and pressure on resource utilization, and the sad fact is that we are getting that healthy pace of job Market Growth with very slow growth in output. So this is i dont think it bears on the inflation outlook. It has prompted a downward shift in the projected path for the neutral and actual federal funds rate, but it is a huge concern because slow productivity growth ultimately means slow growth in living standards, and thats a big concern that policymakers should be focused on. Hi. Victoria guido with politico. Back to wells fargo. Obviously this was more of a Consumer Finance kind of question, but i wonder if you do think it poses soundness issues as something widespread over the big banks. You mentioned it would be a supervisory focus over the coming year. Is there any reason you think might be warranted given these revelations . As i mentioned, we are going to be focusing on compliance, Risk Management and board oversight not only at wells but also across bank holding companies. Of course, consumer issues and issues that involve harm of consumers can become safety and soundness issues, and if there was at least one of the lessons from the financial crisis, i think, is that abuses of consumers of this sort that we see saw in subprime lending ultimately did become safety and soundness issues, and so of course we need to have that concern and well focus there. I cant really at this point give you specifics beyond that. Mike derby from dow jones news works. A large number of Congressional Democrats as well as the campaign of Hillary Clinton would like bankers removed from the boards overseeing the regional fed banks. Also other reformers would like to see the private ownership of the regional the Bank Ownership of the regional feds and that the regional feds be brought fully into government. I wondered what you thought of those two proposals. So we have a system that congress did set up in the Federal Reserve act in which the governance of the reserve banks involves banks contributing capital and serving on the boards of directors. We have long recognized inside the Federal Reserve that when were charged with supervision of banks, that also is a conflict of interest. We have put in place very strong measures to make sure those conflicts of interest are not allowed to play out in any way, that bankers are not allowed to be involved in supervision. Doddfrank changed the arrangement so only the class b and c or nondirecting bankers can participate in the selection of the president as well. So i think i want to make sure the public has confidence that in spite of the fact that we do have this banker involvement in our boards of directors that it is not giving rise to any conflicts in our actual conduct of policy. Now, that set up if that setup is changed, it raises which its up to congress to decide what to do here. It raises complex issues about the governance, the whole governance arrangement in the reserve banks and the Federal Reserve. I would simply caution if that is looked at, as congress is entitled to do, they think through carefully what the ramifications of making changes would be. Karen and then patrick. Karen with market news international. You mentioned in a previous answer the need to be kbaforwar looking, but youve also pointed to the economy not overheating as a reason you could hold off on raising rates at this one. Monetary policy is traditionally operated with long and variable lags. Do you think this timeline has changed since the financial crisis, or due to the use of unconventional tools that the fed used, and how does that factor into your Decision Making . So i think the notion that Monetary Policy operates with long and variable lags, that statement is due to milt on freedman, and it is one of the essential things to understand about Monetary Policy, and it is not fundamentally changed at all. And that is why i believe we have to be forward looking, and im not in favor of the whites of their eyes sort of approach. We need to operate based on forecasts. But the Global Economy and the u. S. Economy have changed a lot. History doesnt always exactly replay itself. Many of the those of us sitting around the table, we learn the lesson that if policy is not forward looking that inflation can pick up to highly undesirable levels, that Inflation Expectations can be dislodged upward, and the consequence of that can be that endemically higher inflation takes place which it is very costly to reduce. And absolutely none of us want to relive an episode like that, and so i believe and my colleagues that it is important to be forward looking. Were not going to make that mistake again. But the structure of the economy changes, things do change. The nature of the inflation process has changed, i think, significantly since the bad days of the 70s when the fed had to face this chronic high inflation probl problem. Weve seen inflation respond less to the economy, to movements in the employment r e rate, the curve has become flatter. Decision making, Inflation Expectations appear to be better anchored and perhaps thats been a result of a long period of low and stable inflation. Its something we didnt have in the 1970s. In addition, we have to be attentive to the fact that weve now had a long period in which inflation is actually undershooting our 2 objective, and we see some signs that i would conclude Inflation Expectations are reasonably well anchored at 2 . But we are seeing signs suggesting possible slippage there. And were a long way from being facing the problems that japan faces, but there always should be a reminder to us that we also would not want to find ourselves in a period where inflation is chronically running below our objective, Inflation Expectations are slipping, and with a low neutral rate, that becomes more important. So things are changed, but the principle of forward looking absolutely holds. Patrick . Hi, patrick, cnn. You just ment