Year. Fed chair janet yellen announced the move at a news briefing where she discussed the state of the u. S. Economy. This is an hour. Ms. Yellen good afternoon, before i get started, i want to say that our thoughts are with those who are injured this morning. Today, the federal open Market Committee decided to raise the target range of the federal fund rate by one quarter of percent percentage point. It to one to one quarter percent. Our decision r our decision reflects the progress the economy has made toward maximum employment. We also released today as an addendum to our policy normalization, principles, and plans, Additional Information on the process that well follow in normalizing the size of our Balance Sheet once we determine it is appropriate to do so. I will have more to say of our Interest Rate decision and our Balance Sheet policy. First, i will review recent economic developments and the outlook. Following a slow down in the first quarter, Economic Growth appears to have rounded. Household spending which is particularly soft earlier this year has been supported by the solid fundamentals including ongoing improvement in the job market and relatively high levels of Consumer Sentiment and wealth. Business investments which was weak from much of last year has continued to expand and exports showing greater strengths this year in part reflecting pick up of global growth. We continue to expect that the economy will expand at a moderate pace over the next few years. In the labor market job gains average of 160,000 per month since the start of the year. A solid rate of growth that although a little slower than last year, we mean well above estimate necessary to absorb new trans of the labor force. A low level by historical standards and modestly below the median of participants estimates of its longer level. The market utilization have improved this year. Broader measures of labor market utilization have also improved this year. Participation in the labor force has been little changed on that for about three years. Given the underlying downward trend in participation stemming largely from the aging of the u. S. Population, a relatively steady Participation Rate is further sign of improving conditions in the labor market. Looking ahead, we expect the job market will strengthen somewhat further. Turning to inflation, the 12month change in the price index for personal consumption next managers was 1. 7 in april. Up from less than 1 last summer, but down somewhat over the past few months. Core inflation, which excludes the volatile food and energy categories, and tends to be a better indication of future inflation, has also edged lower. Lower readings on the reason ratings have been driven significantly by what appeared to be oneoff reductions in certain categories of prices such as Wireless Telephone Services and prescription drugs. These price declines will as a matter of arithmetictter of arif that 12 much twelvemonth inflation figures until the low Mark Readings drop out of the calculations. However, with employment near the maximum sustainable level, the market continuing to strengthen, the committee expects inflation to move up and stabilize around 2 of the next couple of years in line with our longer run objectives. Nonetheless, in light of the softer readings, the committee is monitoring Inflation Developments closely. Let me turn to the Economic Projections that Committee Participants submitted for this meeting. As always, participants condition their projections on their own individual views of appropriate Monetary Policy which in turn depends on each participant assessments of many factors that shape the outlook. The median projection for growth of inflation adjusted growth domestic product where real gdp is 2. 2 this year, slightly 2019,n to 1. 9 by slightly above its estimated longer run rate. The median projections for the Unemployment Rate stands at 4. 3 of the Fourth Quarter this year and takes down to 4. 2 of 2018 and 2019. Modestly below the median estimate of its normal run rate. Finally, the median inflation projection is 1. 6 this year and rises to 2 in 2018 and 2019. Compared with the projections made in march, real gdp growth is little change and Unemployment Rate follows a lower path and inflation although marked down this year for reasons i mentioned earlier is unchanged. Median estimate of the longer run normal Unemployment Rate moves down a 10th to 4. 6 . Returning to Monetary Policy for the past year and a half, the fomc have been gradually increasing its target range for the federal fund rates as the economy is continuing to make progress towards our goal of maximum employment and price stability. Our decision today continues this process. We continue to expect of the ongoing strengths of the economy will warrant gradual increases of funds rate to sustain a healthy labor market and stabilize inflation around our 2 longer run objectives. Thats based on our view that the fund rate remains below our neutral level. The federalvel of funds rate that is neither expansionary nor contractionary and keeps the economy operating on an even keel. Because the neutral rate is currently quite low by historic standards, the federal funds rate would not have to rise all that much further to get to a neutral policy stance. Expect the neutral level of the federal funds rate to rise some what overtime, additional gradual rate hikes are likely to be appropriate over the next few years to sustain economic expansion. Even so, the committee continues to anticipate that the longer run neutral level of the federal funds rate is likely to remain below levels that prevail in previous decades. This view is consistent with participant projections of monetary policies. The median projections of the federal fund rates is 1. 4 at the end of this year and 2. 1 of the end of next year and 2. 9 at the end of 2019 in line of its estimated longer run value. Compared with the projections made in march, the median path to the federal funds rate is essentially unchanged. As always, the Economic Outlook is highly uncertain and participants will adjust their assessments of the appropriate path of the federal funds rate in response to changes to their Economic Outlooks and views of the risks to their outlooks. As i have noted previously policy is not on a preset course. Let me now turn to our Balance Sheet. As i noted in our statement, we are continuing to maintain the size of our Balance Sheet by reinvesting proceeds for securities and principle payments from agency debt and mortgage back securities. Provided that the economy evolves broadly as the committee anticipates, we currently expect to begin implementing a Balance SheetNormalization Program this year. Consistent with the principles and plans, we release in 2014. This program would gradually decrease our reinvestment and initiate a gradual and decline of our Security Holdings. The addendum to our policy normalization principles in plans that we release today provides further information. For both treasury and Agency Securities well reinvest proceeds for holdings only to the extent that they exceed gradually rising caps on reductions of our Security Holdings. Initially these caps will be set at relatively low levels. 6 billion per month treasuries and 4 billion per month in agencies. Any proceeds exceeding those demands will be reinvested. These caps will gradually rise over the course of the year to maximum 30 billion per month for treasuries and 20 billion per month for agencies and securities and will remain in place through the normalization process. By limiting the volume of securities, the private investors will have to absorb as we reduce our holdings of against should guard outsized Interest Rates and other potential market strains. As i noted when our Security Holdings begin to gradually decline, so too will the supply of the reserve balances of the banking system. At some point down the road, the community will bring the decline of the Balance Sheet to an end as the quantity of reserves is normalized. I cannot tell you of the normal run of reserve balance will be because thatll depend on the committees decisions about how to implement Monetary Policy most efficiently and effectively in the longer run as well as a number of as yet unknown elements including the Banking Systems future demands for reserves in various factors that may affect daily supply of reserves. What i can tell you is that we anticipate reducing reserve balances and overall Balance Sheet to level below those scenes in recent years but larger before the financial crisis. As readers of our minutes no, know the committee have discussed potential long run frameworks for implementing Monetary Policy. Decisions about appropriate long run framework do not need to be made for quite some time and our future deliberations will benefit from the experience that well gain during the normalization process. At this point, i will just point out our Current System is working well and has some important advantages. In particular it is simple and efficient to operate does not require active management of the supplier reserves and most importantly provides good control over the federal funds rate and effective transmission of changes in the federal funds rate to broader money market rates. Because our Current System is likely compatible with a much smaller quantity of reserves our plan for gradually reducing the Balance Sheet does not constrain our futures options for how to implement Monetary Policy. Finally as noted in todays addendum, the committee affirmed changing the target range for the federal funds rate is our primary means of adjusting the stance of Monetary Policy. In other words, the Balance Sheet is not intended to be an active tool for Monetary Policy in normal times. However, the committee would be prepared to resume investments if a material deterioration in the Economic Outlook to warrant a sizable reduction in the federal funds rate. More generally the committee would be prepared to use its full range of tools, including altering the size and composition of its Balance Sheet, if future Economic Conditions were to warrant a more accommodating monitoring policy can be achieved solely by reducing the federal funds rate. Thank you and i will be happy to take your questions. Wall street journal. The principles that you released today say the Balance Sheet winds down should commence once Interest Rate normalization is well under way. With the latest rate increase, do you believe normalization is now well under way . Thats something that we have said for some time and i have previously been i have been asked what well under way means, i said i dont want to define that in quantitative terms but in qualitative terms so there is no specific level of the federal funds rate that means we are well under way but it is also a question of not only the current level but our conference in the outlook and our projections for the future path of the federal funds rate. We have increased our federal funds rate target now several times. Our outlook is that we anticipate further increases this year and next year for federal funds rate and our statement indicates that the economy continues to evolve in the manner that we expect that we would feel the conditions will be in place to begin this process this year. I am wondering if you have talked to the president or members of the staff of the possibility of staying on as chair for a second term. I am wondering if you would consider doing that, is it something that you thought doing and finally there are three vacancies on the feds from you do you have any comment for the president to nominate any positions . Chair yellen what i have said about my own situation in the intent to serve out my full term as chair, which ends in early february. I have not had conversations with the president about future plans. I do very much hope, i know that they have been working hard to identify appropriate nominees for the open slots and i do very much hope that there will be nominations in the not too this dim future and the senate will take those up expeditiously. I look forward to having a full board. Do you desire to stay on . Chair yellen i really dont have anything for you at this point. I am from the financial times. We have had a fairly long streak of weak Inflation Numbers by the cpi. Expectations are declining. How does this interact with your would outlook, and further disappointments argue for rate hikes or delaying Balance Sheet runoffs . How do you think about those two potential responses to weak inflation . Chair yellen let me just say, as i emphasized in my statement, Monetary Policy is not on a preset course. We indicated in our Statement Today that we are closely monitoring Inflation Development and certainly, have taken note of the fact that there have been several weak readings, particularly on core inflation. Our statement indicates that we expect inflation to remain low in the near term, but on the other hand, we continue to feel strong labor market and a labor market that is continuing to strengthen, the conditions are in place for inflation to move up. , we need toy monitor that very carefully and ensure, especially with roughly five years of inflation running objective, that is a goal to which the committee is strongly committed and we need to make sure that we have in place the policies that are necessary to achieve 2 inflation and i pledge that we will do that, but let me say with respect to reason readings, it is important not to overreact to a few readings and data on inflation can be noisy. As i pointed out, there have factorse idiosyncratic i think that have held down inflation in recent months, particularly a huge decline in cell Telephone Service plan prices. Some declines in prescription drugs. We had an exceptionally low march, on core pce in and that will continue to hold down 12 month changes until that meeting drops out. But we are, this mornings reading on the cti showed weakness in a number of categories. And its certainly something that we will be closely monitoring in the months ahead. On making our policy decisions on the mediumterm outlook. Be we will you know, looking carefully at incoming data and as always, revising our outlook and policy plans as appropriate. [indiscernible] continue as so, todays actions show to feel the economy is doing well, is showing resilience. We have a very strong labor market. An on implement rate that has declined to levels we have not seen since 2001. And even with some moderation in job growth, we have a labor market that continues to strengthen and policy remain accommodative. So, its important that inflation move up to our 2 objective, as our projections show we continue to expect that and believe that the conditions are in place. But we will monitor incoming data, obviously, and be attentive to rethinking our outlook if it seems appropriate. I am from bloomberg news. Labor the thbe point on inflation, but i was wondering, i hear a lot of the socalled niru, your conversation now and other committee members. It is an unobservable thing, at best its an estimate. And the assumptions in there seem to me like the Economy Today is much like the economy yesterday, when, if anything, weve learned that the postrecession economy is vastly different than it was before the recession. Im wondering, something youve talked about is to focus more on the change in inflation, actual inflation and is it going up or going down and basing policy more on that. What would be the risk of that, and why not adopt that if you have such a long period of underperformance . Chair yellen we are looking at the actual performance of inflation. And we are altering our views on the basis of discrepancies between what we see and our expectations. Andw hil while it is very diffit to pin down the longer return normal rate of unemployment and there is a great deal of uncertainty about it and it is hard to pin down, especially given the fact that the socalled phillips curve appears to be quite flat, that means inflation does not respond very quickly to movements in unemployment. Nevertheless, that relationship i believe remains at work. That operate historically. Now, in the face of very low unemployment that we have seen, upe growth has picked somewhat, but it remains low. Inflation is influenced by a number of different factors, but we certainly have not seen much, or any, evidence of upward pressure on inflation. The committeeat, has successfully moved down its estimate of the normal longer run rate of unemployment and in this projection, its moved down to 4. 6 , 1 10 lower than it was last time. Unemployment rate is below that, it is not that much below it. I am from the washington