There. Thanks very much. Thank you. Federal reserve chair janet yellen talks about monetary policy. Thats next. And paul bremer and jay carney. Later, a Senate Hearing looks at stock practices and insider training. House republicans will meet tomorrow to elect a replacement for eric cantor. Congressman Kevin Mccarthy of california and labrador of idaho will chair. Next, the head of the Federal Reserve is asked about the status of the Federal Reserve program. Janet yellen spoke to reporters. Good afternoon. The committee concluded its june meeting earlier today. As was indicated in our policy statement, we will make maintained its Forward Guidance regarding the rate target, and remains appropriate. Todays policy actions reflect the committees assessment that the country is continuing to make progress toward maximum employment and price stability. The Unemployment Rate is fourtenths lower than at the time of our march 6th meeting. And those working parttime but preferring fulltime work has fallen by a similar amount. Unemployment remains elevated, and underutilization in the labor market continues. And this appears to have resulted mainly from transitory factors. Spending by domestic households and businesses continued to expand in the first quarter. And the limited set in the Second Quarter have picked up. The committee thus believes that Economic Activity is rebounding and will continue to expand at a moderate pace thereafter. Overall, the committee continues to see sufficient underlying strength in the economy. And the committee remains mindful that inflation could pose risks to performance. And expectations continue to be wellanchored. The committee continues to expect inflation to move gradually back. And the committee wants to ensure that the policy continues to reflect the longerterm objectives of employment and inflation rates of 1. 2 . As always, each participants projections are modeled on their own perspectives. Now stands at 6. 0 to 6. 1 . And we generally see the Unemployment Rate declining to the normal level by the end of the 2016. And 2. 1 to 2. 3 for 2014. Down notably from the march projections. Largely because of the unexpected contraction in the first quarter. Finally, fomc participants continue to see inflation moving only gradually back to 2. 3 over time as the economy expands. The central tendency of the projections is 1. 5 to 1. 7 , ri rising in 2016. And the committee decided to make another measured reduction in asset purchases. And we will go down 10 billion from todays rate. And after, we will continue to expand our holdings of longerterm securities. And reinvest Principal Holdings of agency debt and agency mortgageback securities. These sizable and still increasing holdings will continue to put downward pressure and make financial conditions more accommodative. H todays announcements show that progress to the objectives will continue. On going improvement in labor markets and inflation moving back over time toward etc. Longer run objective, the committee will likely continue to reduce objectives in measured steps in future meetings. But it is not a preset course and decisions remain contingent on the outlook for jobs and inflation as well as the assessment of the likely success of these policies. And in determining how long to maintain the target rate for the federal funds rate, the committee will assess progress toward its objectives. This broad assessment will not hinge on any one or two indicators, but will take into account a large range of indications. Based on its Current Assessment of these factors, the committee anticipates that it will be appropriate to maintain the rate until the program ends, especially in continued inflation continues to run below the goal and longerterm expectations remain wellanchored. And its the committees Current Assessment that Economic Conditions may for some time warrant keeping the target federal funds rate below levels the committee regards as normal in the longer run. This is consistent with the policy as reported in the participants projections. Which show the federal funds rate remaining below normal values in 2015. And although there are a number of explanations of the federal funds rate target remaining below its normal level, there are some reasons diminished expectations in future outcomes may be lower for some time. Let me reiterate that the committees expectations are contingent on the economic outlook. If it continues to be stronger than the anticipation of the committee, then increases in the federal funds rate target are likely to occur sooner and be more rapid than currently envisaged. Resulting in larger and significant increases, then the changes will takegradual. These represent prudent planning, and the intention to communicate plans to the public. The committee is confident it has the tools it needs to raise shortterm Interest Rates and to control the level of the Interest Rates thereafter. The committees recent discussions have centered on the appropriate mix of tools to employ during the normalization process and the degree of control over shortterm Interest Rates, the funding of the federal funds market, and the extent to which the Federal Reserve interacts outside of the banking center. We will continue its discussions in upcoming meetings, with details coming later this year. Thank you. Id be happy to take your questions. Is there every reason to expect that the pce inflation rate, followed by the fed, looks to exceed your forecast later this week. Does this mean that the Federal Reserve is ahead of inflation . If its above the 2 target, how is that not blowing through the target in the same way you blew through the 6 target . Thanks. Thanks for the question. So, i think recent readings on, for example, the cpi index have been a bit on the high side. But i think its, the data were seeing in noisy. Its important to remember that inflation is evolving in line with the committees expectations. The committee has expected a gradual return, and the evidence weve seen suggests that were moving toward our 2 objective, and i see things roughly in line with what we expected it to be. And looking at the projections we submitted this time, we see have little change with the projections of the committee. What about the tolerance for higher inflation . Well, the committee has emphasized that we have the 2 objective as a longerterm for pce inflation. And we will not willingly see a period where inflation is above or below our objectives. And we continue to see the data coming in, abstracting from the noise, in line with what we expected. And continue to see a gradual Movement Toward our expectations in the next two years. Can you please talk about is that something more permanent about the economy . Is this it, or is there potential to go lower yet . Well, you do see a slightly higher decline in the committees longerterm normal rate of interest projections. I would caution you, however. Weve had turnover in the committee. Two new participants that are new and two who departed. And that can create changes in the projections. Small changes that are difficult to interpret. And i think the most likely reason for that is, theres some slight decline of projections pertaining to longerterm growth. And particularly estimates of would move in line with growth projections. My question is the flip side of steves. Its about your outlook for unemployment. Your predecessor said that today, you lowered your outlook again. How do you see the Unemployment Rate evolving . What might an unexpected drop mean for the first rate hike . Its true that unemployment has declined slower than the committee has expected. And you do see a slight lowering of expectations in terms of the Unemployment Rate. But i think weve seen continued job growth at a pace that is certainly better over the time. Over the last three months, for example, employment, Payroll Employment has been rising. Around 230,000 jobs per month, and close to 200,000 over the last year. That said, many of my colleagues and i would see a portion of the decline in the Unemployment Rate is perhaps not representing a diminution of rate in the labor department. And i think most of us would agree that there has been and will continue to be decline for d demographic reasons. I think it probably reflects a kind of shadow unemployment or discouragement. A cyclical part of Labor Force Participation. If thats correct, we may see further recovery in the labor market. Those, let call them, discouraged workers will return either to unemployment or employment. And as Labor Force Participation begins to stabilize, the rate will come down less quickly. And i think for a number of people, thats a component of the forecast. You asked about implications for the path of policy. Well, the Forward Guidance states that the timing of liftoff will depend on actual progress we see, and the progress we expect Going Forward to achieve our goals. Maximum employment and 2 inflati inflation. So, were not going to look at any single indicator like the employment rate to assess how were doing. Well look at a broad range of indicators. But there is uncertainty about monetary policy. The timing and pace of Interest Rate increases. Ought to, and i believe will, respond to independeicatorndica. But the opposite also holds true. If we dont see the improvement thats projected in the baseline outlook, the opposite will be true in the case of the timing and Interest Rate increases will be later and more gradual. And some officials and commentators have noted to Market Conditions look like they did last spring before a period of volatility. Risk premiums are low. And in particular, Market Expectations for shortterm Interest Rates look below the feds projections. I want to ask two questions about that. One, what is your read on market activity. And are you at all concerned about a sense of complacency in markets . And two, what is your view on Market Expectations that the fed has laid out in its dot plot . Is the market where the fed is on that . Well, id start by saying that volatility, both actual and expected in markets is at low levels. The fomc has no target for what the right level of volatility should be. But to the extent that low levels of volatility may induce risktaking behavior that entails buildup in leverage or extension of maturity, things that can pose risks to Financial Stability later on, that is a concern for the committee. I dont know if overconfidence or complacency is one of those reasons, but i guess i would say it is important, as i emphasized in my opening statement, for market par tticipants that ther is uncertainty. And the adjustments to the policies will be adjusted over time, and that gives rise to a certain level of uncertainty about what the path of rates will be. And thats important for Market Participants to factor into their decision making. You asked me about the dot plot, forecasts or projections for the fed funds rate. You do see a range of disagreement among the participants there. By 2016, there is a considerable range of disagreement. Participants do see different rates of trajectories of inflation and recovery. And they adjust this to their own view of how the economy will evolve over time. And around each of these dots, every participant has a considerable band of uncertainty around their own individual forecasts. Youve spoken about the sense that the recession has done permanent damage of the economic output. Im curious to know what you think stronger policy could reverse the trends. Is there something we can do about it . And if not, why . Well, i think part of the reason were seeing Slower Growth may reflect the fact that Capital Investment has been slow in the recovery were experiencing. So it does make a negative contribution to growth. As the economy picks up, i certainly would hope to see that contribution restored. So, i think thats one of the factors thats been operative. Of course, weve had unusually long duration, unemployment, a very large fraction of those unemployed for more than six months. There is the fear that those individuals find it harder to gain employment, that their attachment to the labor force may diminish over time. And the contacts that are helpful to gain employment could erode over time, and because they havent had jobs for a long time, they find themselves permanently outside the labor force. My hope and expectation is that as the economy recovers, we will see some repair of that. That many of the individuals where were long term employed would take jobs if the economy is stronger and would be drawn back in again. But it is conceivable that there is some permanent damage to them, their familys wellbeing and the economys potential. Thank you, madam chair. I believe you mentioned in our opening remarks, tighter credit. And im wondering if you think the possibility of the Federal Reserve is partially responsible for them. And the litigation, i read something that where the three largest banks have paid millions of dollars in fines so far. If you look at Federal Reserve bank of new york research, and people below a fica of 500 are havie inine ining worse credit. Banks just dont want to take the risk. So, what can you do to fix that . I would first start by saying i really think its essential to strengthen Financial Regulation and make it more robust and reduce risk. So, i think the regulations weve put in place, most of which follow from doddfrank, are highly appropriate to create a more robust Financial System which will be a safer one Going Forward. And i think were making progress is doing that. Putting regulations in place, weve tried to phase them in that gives long enough lead times to make sure that, in strengthening the system, we dont produce a credit crunch. And my assessment is that credit is broadly available. But i do agree with what you said in terms of mortgage credit. Banks are not as likely to lend to lower fica scores. And i think it is difficult for any homeowner who doesnt have pristine credit these days to get a mortgage. I think thats one of the factors causing the home Market Recovery to be slow. And of course, there are a lot of practices in connection with mortgage lending that need to be changed. But we can clarify the rules to create an environment of greater certainty for lenders to be willing to extend mortgage credit. The fed has slashed expectations in lending for this year. And you said there is uncertainty in the path of recove recovery, but the expectations remain quite strong. Are you quite certain that the United States will sustain a period of growth . Well, there is uncertainty. But i think there are many good reasons why we should see a period of sustained growth in excess of the economys potential. We have a highly accommodative fiscal policy. Easing credit conditions. We have households who are becoming more comfortable with their debt levels and more able to service debt, an improving job market. Rising home and equity prices. An improving global economy. I think all of those things ought to be working together, and thats reflected in the forecasts. But of course, there is uncertainty reflected in the projections. And over a number of years in which admittedly, growth has come slower than wed like. But i think that we will broadly continue to improve. And i assume that involved some review, the third anniversary of the june 2011 exit principles. Is the committee reaching a consensus about the reinvestment and rollover policiepolicies. Id be interested in your personal view on that. That was included in our principles. Weve not yet reached weve made quite a lot of progress in our discussion, but havent reached a conclusion. There are a couple of things chairman bernanke indicated in contrast to our 2011 principles. We would be very unlikely to be able to sell mortgagebacked securities. And some of the principles that were incorporated in that package, expecting our Balance Sheet to shrink back toward normal levels that would be consistent with officially conducting monetary policy. Thats still an expectation, and that eventually, our portfolio will consist largely of but there are a number of tools that we can continue to use. Our rrp facility, term purchase agreements, and exactly how to deploy that set of tools to meet our objective of raising the general level of shortterm rates when the time becomes appropriate. And how best to communicate to the public and to markets how were conducting policy and what our objectives are. Were hopeful to come back with a full description, or a revised set of principles later this year. Madam chair, one of the outstanding reform issues on the plate of the fed is to handle the risk associated with shortterm funding. Can you please explain to us why its taken so long to get this proposal out and where we may be in that process . Thank you. Im afraid i cant give you a detailed timetable. Weve been supportive of taking some action to diminish the incentives for heavy reliance on shortterm funding. We still see that as one of the risks to the Financial System. Or in thely related to reliance on wholesale funding. Ive been supportive, but im afraid, at this point, and this remai