tv Key Capitol Hill Hearings CSPAN September 18, 2015 6:00am-7:01am EDT
plus upcoming visit to the u.s. and we have live coverage in washington. and wednesday, september 23, the pope will visit the white house. it will be followed by a meeting with president obama and on thursday, september 24, the pope makes history on capitol hill, becoming the first pontiff to address the house and the senate during a joint meeting. follow all of our live coverage of the pope process toric visit to washington. general loretta lynch will speak at the congressional black caucus legislation later today hosted by congressman john conyers with a focus on criminal justice reform and policing in minority communities.that is live on c-span two at 11:00 a.m. eastern.
federal reserve chair janet yellen announced that interest rates will. increase yet and then she held a news conference. this is about one hour. ms. yellen: good afternoon, as you know from our policy statement released a short time ago, the federal open market committee reaffirms the current % rate for the federal funds rate. since the committee met in july, the pace of job gains has been solid. the unemployment rate has declined an overall labor market conditions have continued to improve. inflation has continued to run
below our objective reflecting declines in energy prices. we expect the downward pressure on inflation from these factors will fade over time but recent global economic and financial developments are likely to put further downward pressure on inflation in the near term. these developments may also restrain u.s. activity somewhat but have not led to a significant change in the committee's outlook in the u.s. economy. the committee continues to anticipate that the first increase in the federal funds when itl be appropriate is seeing further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium-term. it remains the case that the committee will determine the timing of the initial increase based on its assessment of the
implications of incoming information to the economic outlook. the importance of the initial increase should not be overstated. monetary policy will remain highly a commentator for some time after the initial increase in the federal funds rate in order to support continued progress toward our objective of maximum employment and 2% inflation. i will come back to the policy decision in a few moments but first, i would like to review recent economic developments and the outlook. moving through the quarterly volatility, u.s. real gross domestic product is estimated to 2.25% in the at first half of the year. it's a notably stronger outcome than expected in june when committee participants had submitted economic projections.
job gains and increases in real disposable income have supported household spending. growth in business and fixed investment was moderate held down in part by a significant contraction in oil drilling activity as a result of the largest drop in oil prices over the past year. substantial drag on gdp growth during the first half of the year reflecting the earlier appreciation of the dollar and weaker foreign demand. the committee continues to expect the moderate pace of overall gdp growth even though the restraint from net exports is likely to persist for a time. the labor market has shown further progress so far this year toward our objective of maximum employment. over the past three months, job gains averaged 225,000 per month.
the an employment rate at 5.1% 0 of 1%st was down 4/1 after the latest reading. that decline was accompanied by reduction in the labor force participation rate over the same time. a broader measure of unemployment that includes individuals who want and are available to work but have not actively searched recently and people who are working part-time but would rather work full-time has continued to improve. that said, some cyclical weakness likely remains. while the unemployment rate is close to mostfomc estimates of the longer levels, the participation rate is below estimates of its underlying trend. voluntary part-time employment remains elevated and wage growth remains subdued. inflation has continued to run
below the 2% objective. that reflects declines in energy and import prices. my colleagues and i continue to expect that the effects of these factors on inflation will be transitory. however, the recent additional decline in oil prices and further appreciation of the dollar mean that it will take a bit more time for these effects to fully dissipate. accordingly, the committee anticipates that inflation will remain quite low in the coming temporarythese effects stay, important link is the labor market improving. we expect inflation to move gradually back to the 2% objective. survey-based measures of longer-term inflation expectations have remained stable. the committee has taken note of recent declines in market based measures of inflation
compensation and will continue to monitor inflation developments carefully. assessment of the outlook is reflected in the individual economic projections submitted -- this meeting by fm oc fomc participants. as announced in the minutes from our july meeting, we are also introducing a modest enhancement to the summary of economic projections by publishing the median projection across fomc participants. these comedians provide a concise summary statistic of participants'perspectives and should not be interpreted as a collective view or a committee forecast. as always, each participant projections are conditioned on his or her own view of appropriate monetary policy. reflecting upward revisions for the first half of the year,
participants increase their projections for economic growth this year compared with the projections made in conjunction with the june fomc meeting. growth projection is 2.1% for this year and rises to 2.3% in 2016 somewhat above the median estimate of the longer run normal growth rate thereafter, the median growth projection declines toward its longer run rate. than june.lower at the end of this year, the median unemployment rate projection stands at 5%. 0 of 1% in june. it will then level out.
finally, fomc participants project inflation to be very low this year. it is largely reflecting lower energy and non-energy import prices. holdingnsitory factor down inflation today and labor market conditions continue to firm, the median inflation just/10on rises 4 from cheer and.7% the reaches 2% in 2018. the path of the median inflation projection is a bit lower than in june. the outlook abroad appears to have become more uncertain of late and heightened concerns about growth in china and other emerging market economies have led to notable volatility in financial markets. since our july meeting including the drop in equity prices, the further appreciation of the dollar, and
widening and risk spreads have tightened overall financial conditions to some extent. these developments may restrain u.s. economic activity somewhat and are likely to put further downward pressure on inflation in the near term. given the significant economic and financial interconnections between the united states and the rest of the world, the situation abroad bears close watching. returning to monetary policy, we recognize that there has been a great deal of focus on today's policy decision. the recovery from the great recession has advanced sufficiently far and the mystic spending appears sufficiently robust that an argument can be made for a rise in interest rates at this time. we discussed this possibility at our meeting.
however, in light of the heightened uncertainties abroad and the slightly softer expected path for inflation, the committee judged it appropriate to wait for more evidence including some further improvement in the labor market to bolster its confidence that inflation will rise to 2% in the median term. i do not want to overplay the implications of these recent developments which have not fundamentally altered our outlook. the economy has been performing well and we expect it to continue to do so. it remainsearlier, the case that the timing of the initial increase in the federal funds rate will depend on the committee process assessment of the indications of incoming information to the economic outlook. clear, our decision will
not hinge on any particular data release or on day to day movements in financial markets. instead, the decision will depend on a wide range of economic and financial indicators and our assessment of their cumulative implications for actual and expected progress toward our objectives. let me again emphasize the specific timing of the initial increase in the target range to the federal funds rate is far less important for the economy than the entire expected path of interest rates and once we begin to remove policy accommodation, we continue to expect that economic conditions will it evolve in a manner that will warrant only gradual increases in the target federal funds rate. compared with the projections made in june, many fomc participants lowered their path for the federal funds
rate including estimates of the longer run normal level. most participants continue to expect that economic conditions will make it appropriate to raise the target range for the federal funds rate later this year. participants expect such conditions will not be seen until next year or later. the median projection for the federal funds rate rises to 2016, 2.5% inlate in 2018., and 3.5% in 2016 and 2017, the medians 5% below what is projected. the projected rate in 2017 remains below the rate that most participants expect to prevail in the longer run despite the fact that the median projection
has the on employment rate slightly below its longer run normal level and inflation close to the 2% injected. participants provided a number of destinations for their low federal funds rate projections. these included in particular, the residual effects of financial crisis, which are likely to continue to strain spending for some time, as well as headwinds from abroad. the restraining influence of these selectors -- factors, as the restraining influence of these factors unreal activity dissipates further, most participants expect the federal funds rate to move to its longer normal levels by the end of 2018. i would like to underscore it at the forecast of the appropriate path of the federal funds rate, as usual, are conditional on participants' individual projections of the most likely
outcomes for economic growth, employment, inflation and other factors. but our actual policy actions over time will depend on how economic conditions evolve, which is quite uncertain. if the expansion proved to be more vigorous than currently anticipated, and inflation moves higher than expect, then the appropriate path would likely follow us deeper and higher trajectory. -- a steeper and hired project three. -- and higher trajectory. trajectory would be lower and less steep. the committee's sizable holdings of longer-term securities should help maintain accommodative financial conditions, and promote further progress toward our objectives.
thank you, let me stop there. i would be happy to take your questions. >> steve, cnbc. madam chair, this notion of uncertainty and economic and global development, is it fair to say that it could be many months before those global developments work their way through the u.s. economic data, and that you would not have the certainty that you are looking for to raise interest rates for many months well into next year? chair yellen: steve, i think you can see from the sdp projections that most participants continue to think that economic conditions will call for or make appropriate an increase in the federal funds rate by the end of this year. for participants moved their projections into 2016 or later, but the great majority of
participants continued to hold that view. of course, there will always be uncertainty. we can't expect that uncertainty to be fully resolved. but in light of the developments we have seen, and the impacts on financial markets, we want to take a little more time to evaluate the likely impacts on the united states. as i mentioned, the inflation outlook has softened slightly. we have had some further developments, namely lower oil prices, and a further appreciation of the dollar, that put downward pressure in the near-term on inflation. we fully expect those further effects like the earlier moves in the dollar, and in oil prices, to be transitory, but there is a little bit of downward pressure on inflation. we would like to see some
further developments. this importantly, could include further improvements in the labor market that would bolster our confidence that inflation will move back to percent over the medium term. -- 2% over the medium term. >> can i ask about the next meeting in october, do you view that as a live meeting even though there isn't going to be a scheduled press conference at that time? what kind of developments would you need to see to be confident in moving in the near-term, is it more important in the financial markets or the upcoming data? thank you. chair yellen: as i have said before, every meeting is a live meeting, where the committee can make a decision to move to change our target for the federal funds rate, that certainly includes october.
as you know, and i have stressed previously, where we to decide to do that, we would call a press briefing and you've participated in an exercise to make sure that you would know how to participate in that press briefing, should it happen. so yes, october remains a possibility. we will be looking at incoming developments, both financial and economic, to try to make sure we feel that the u.s. economy is doing well. i want to emphasize domestic developments has been strong, we see domestic demand growing at a solid pace, the labor market continuing to improve. of course, we will watch incoming data to confirm how expectation that that will
continue, and we of course will watch global financial and economic developments. i can't give you a recipe for exactly what we are looking to see, but as we say, we want to see continued improvement in the labor market, and we would like to bolster our confidence that inflation will move back to 2%. further improvement in the labor market does serve that purpose, to put the other things we would see that could bolster that confidence, but further improvement in the labor market will serve to do that. >> gym from the l.a. times. there were a group of protesters out here before the meeting, there was a similar group at jackson hole. they and others have warned the fed not to raise rates, out of concern that the labor market is not fully healed, wages have not
risen fast enough. what impact has had on you and your colleagues and your decision today? chair yellen: we have been receiving advice from a large number of economists and interested groups. that is of course appropriate, and we value hearing the opinions of many differing groups and individuals with different perspectives. but at the end of the day, it is the committee's job to come together to analyze the data that we have on the economy, to decide how it affects the outlook, and to try to deliberate and arrived at a committee judgment about the appropriate path of policy. that is what we did today. as i said, although we are close to many participants, and the median estimate of the longer
run normal rate of unemployment, at least my own judgment -- and this has been true for a long time -- is that there are additional margins, particularly relating to very high levels of part-time involuntary employment, and labor force participation that suggests that at least to some extent, the standard unemployment rate understates the degree of slack in the labor markets. but we are getting closer, the labor market has improved. as i have said in the past, we don't want to wait until we have fully met both of our objectives to begin the process of tightening policy, given the legs in the operation on monetary policy. >> kate davidson from the wall street journal.
do you think over the last two months that you have gotten closer to or further away from the inflation goals? separately, you have received a congressional subpoena related to the disclosure of information from the said september 2012 meeting, are you any closer to complying with that and have you turned over information to congress? chair yellen: your first question was have we come closer are moved further away from our inflation goal. we have used the same language, which is that we expect to achieve our 2% goal over the medium-term. i would say, as we say in our statement, recent developments seem likely to put downward pressure. we are after all way below the inflation targets. but an important reason for that is that declines in import prices reflecting the appreciation of the dollar and
declines in energy prices are holding down inflation, well below our target and well below core inflation. we expect those effects to be transitory, and with inflation executions, we expect inflation to move back to 2%. in the interim meeting period, we have seen some further appreciation of the dollar and further downward pressure on energy prices. that creates a bit of further drag on inflation that i would view as transitory. it is very likely to be transitory. i continue and the committee continues to expect that the inflation will move back to 2%. this should be a small thing. in the meantime, the labor market has continued to improve.
tighter labor market moving toward full employment, is one that historically has generated a boards pressure on inflation. -- upward pressure on inflation. that bolsters my confidence in inflation. on the other hand, we have had a long period in which inflation has been running below our objective. i consider it very important that we achieve our inflation objective, and defend against inflation that is persistently above our inflation objective, and also persistently below our inflation objective. we want to have not only in a good degree of confidence that that will occur. we did take note in the statement of the decline in inflation compensation. it is hard to get a direct read on inflation expectations out of
these measures. they can be pushed down by factors pertaining to liquidity, and the treasury, and the tips market, and other issues pertaining to risk premia. but we have taken note. i would say that is something that is caught has caught our attention, and factors we are watching. we would like to have a little bit more confidence, but i would not interpret development during the intermediate period as significantly undermining confidence. the labor market is really important, that as it continues to improve, it has and we want to see it improve further, that there is to bolster confidence. you asked about september 2012. we are working very closely with house financial services committee that requested
information to satisfy their request. we are working very closely with them. >> from the new york times. the economic projections you released today show that members expressed -- expect a three-year time when the unemployment rate will be at its lowest sustainable level but inflation will not rise above 2%. that seems extraordinary. can you talk about why we would expect inflationary pressures one unemployment is at mid-level, why would inflation be so weak, and does it indicate that you are projecting much of the decade will pass without the fed reaching inflation target, does it indicate the u.s. failed to do enough to revive the economy? chair yellen: we have been very focused on doing everything we can to revive this economy, and to achieve our maximum
employment objectives. after we took the funds rate down to zero, as you know, we put in place a number of other extraordinary measures, including forward guidance and large scale asset purchases in order to speed the recovery and attain both our inflation objective and maximum employment objective. when you look at the production -- projection, you can see that we see sufficient growth to push the unemployment rate. it is already very close to participant's estimates of its learn curb run normal level. -- longer run normal level. we expect the unemployment rate to fall slightly, but participants project it will fall slightly below that level. if that occurs, we would expect
labor force participation, the cyclical component of that, to diminish over time. we would hope to see some decline in the portion of slack that is reflected in high levels of part-time involuntary employment. inflation is going back in our projection to 2%. it takes until 2018 to get there, it is awfully close in 2017, and not terribly far away even next year. we have very large drags from import prices and energy prices. over the next year or so, those things should dissipate, and the behavior of inflation should mainly, if our understanding of the inflationary process is correct, and if inflation
expectations are anchored at two, if the labor market heels, and if the healing progresses, we will see further upward pressure on inflation. that is what we expect now. it is a slow process. it is characterized by lags, and that is why it takes a few years as the unemployment rate falls, and even overshoots is longer run normal level, it just takes some time for inflation to get back to 2%. but the overshooting helps the cap back faster than it otherwise would. -- helps it get back faster than it otherwise would. it is certainly important for us and our credibility hinges on defending our inflation. t only from if it rises above,
-- not only from threats that it rises above but also if we would , not have over the medium-term that we want to see inflation get over 2%. we believe the policies we are fat -- following are designed to accomplish that end will do so. -- and will do so. >> thank you. from the washington post. i want to piggyback on that question, and bring up the old threshold of 6.5% unemployment and 2.5% inflation, when the fed promised to keep interest rates low. that has assumed, or suggested the fed was comfortable with inflation rising above 2%, but you just said moments ago that you don't want to wait until inflation actually hit your target before you are ready to lift off. and wonder if you could explain that a little bit, is there a shift in how much inflation the fed is willing to accept? chair yellen: let me be clear, 2% is our objective. we want to see inflation go back to 2%, 2% is not a ceiling on
inflation. we are not trying to push the inflation rate above 2%, that is always the objective. but 2% is not a ceiling, and if it were, it would have to be conducting a policy that on average would hold the inflation rate below 2%. that is not our policy. we want to see the inflation rate get back percent as rapidly -- back to 2% as rapidly as we can. but there are lines and the impact of monetary policy on the economy -- lags on the impact of monetary policy on the economy. it an employment falls below estimates of the natural rate, only then did we start to begin -- the word "tighten" monetary policy i don't think is right.
let me say, just to begin to diminish the extraordinary degree of accommodation for monetary policy, we would likely overshoot substantially our 2% objective. we might be faced with and having to tighten policy in a way that could be disruptive to the real economy. and i don't think that is a desirable way to conduct policy. >> gina from bloomberg news. you mentioned earlier that there is always going to be some uncertainty in the global economy. yet it seems that that is what kept you from hiking this month. how do you communicate to markets, what is the kind of uncertainty that keeps you from
lifting rates, and what is the uncertain you -- uncertainty you can overlook? chair yellen: that is a very hard question. it is why we come together and had very careful of valuations of a wide range of factors. -- evaluations of a wide range of factors. but at the end of the day, we are focused on two things. the path for employment, and whether or not we feel confident we are on the road that will take us to our maximum employment objective, and whether or not we see the risks around attaining that as balance. of course, there will be uncertainty around it. with that, we have reasonable confidence inflation will, over the medium-term, go back to 2%. it is really through that filter that we are trying to look at uncertainty. of course, there are many uncertainties in the global economy, but we are asking
ourselves how economic and financial developments in the global economy affect the risk to our outlook for our two goals, and whether or not they create unbalanced risks that we want to wait to resolve to some extent. >> can you talk about what foreign developments you discussed and what you are concerned about? we assume it might be tied -- china, are you concerned about the chinese economy slowing, the markets there? do you have concerns about the european economy? related to stop markets can i -- related to stock markets, can i ask you feel how -- how you feel about u.s. equity markets,
because you spoke about the inmate and you saw that they were generally quite high. now equity prices have pulled back. chair yellen: with respect to global developments, we reviewed developments in all important areas before, but we have focused particularly on china and emerging markets. so we have long expected that most -- as most analysts have, we have expected to see the chinese rebalance their economy. they have planned that, and i don't think there are more surprises there. the question is whether there might be a risk of a more abrupt slowdown than most analysts expect. i think there were concerns about the deftness with which
policy makers are addressing those concerns. in addition, we saw a very substantial downward pressure on oil markets. those developments have had a significant impact on emerging market economies that are important committees -- producers of commodities, as well as more advanced countries, including canada, which is an important trading partner of ours, that has been negatively affected by declining commodity prices. there are a lot of countries that are net importers of energies are positively affected, but emerging markets
has been negatively affected by those developments. we have seen significant outflows of capital from those countries, pressures on their exchange rates, and concerns about their performance going. forward. a lot of our focus has been on risk around china, but not just china, emerging markets more generally and how they may still over to the united states. in terms of thinking about financial developments and our reaction to them, i think a lot of developments -- we don't want to respond to market turbulence. the fed should not be responding to the ups and downs of the markets. it is certainly not our policy to do so. but when there are significant financial developments, it is incumbent on us to ask ourselves what is causing them.
of course, while we can know for -- we cannot know for sure it , seems to us as though concerns about the global economic outlook for drivers of those financial developments. they have concerned us in part because they take us to the global outlook and how that will affect us. to some extent, we have seen a tightening of financial conditions during the interim meeting period. the stock market adjustment, combined with a somewhat stronger dollar and higher risk spread does represent some tightening of financial conditions. in and of itself, it is not the end of things in terms of policy, because we have to put a lot of pieces together. we are looking at a u.s. economy
that has been performing well, and impressing us by the pace at which it is creating jobs, and the strength of domestic demand. we have that, we have some concerns about negative impacts from global developments, and tightening of financial conditions. we are trying to put all that together. we say in our statement, despite of all of this, we continue to view the risks, of economic activity and labor markets as balanced. there are a lot of different pieces, different cost currents, some street and indeed outlook -- some strengthening the outlook and some creating concerns, but overall no significant change in the economic outlook. >> just to piggyback on the
global considerations, as you say, the u.s. economy has been growing. are you worried given the global interconnectedness, low inflation globally, all of the other concerns you spoke that, that you may never escape from this zero situation? chair yellen: i would be very surprised if that is the case. that is not the way i see the outlook, or the way the committee sees the outlook. can i completely ruling out? i can't completely rule it out. that is an extreme downside risk that near the center of my outlook. -- that in no way is near the center of my outlook. >> michael mckee from bloomberg radio and television. if the economy develops as bit projections suggest, you will
see improvement in labor market, but it won't push inflation of any faster. i'm wondering what the argument is for raising rates this year. even allowing for long and variable lags, you are not forecasting and inflation problem -- problem that would need a faster rate path for at least a couple of years. chair yellen: if we maintain a highly accommodative monetary policy for a very long time from here, and the economy performs as we expect, namely it is strong in the risks that are -- and the risks that are out there don't materialize, my concern that will be much more tightening in the labor markets then you see in these projections.
that's something we've seen in several european countries. it's not something we talk about today. i don't expect that we're going to be in the path of providing additional accommodation, but if the outlook were to change in a way most of my colleagues and i do not expect and we found ourselves with a weak economy that needed additional stimulus, we would look at all of our available tools and that would be something we would evaluate in that context. associated press. in july when you were talking to us, you said that you yourself the firstacted to see rate hike before the end of the year. is that still your expectation? when you talk about the developments in financial
markets and what caused the august turbulence -- you mentioned china -- you did mention the prospect of a fed rate increase. do you think that would slow as well? you asked me about my own expect haitians. i would say -- i speak on behalf of the committee and try to explain committee decisions. we do not identify who's who in terms of our projections with the funds rate. i do not want to change that and my personalus be on views on the past. i have characterized the a forecastiew as prevails likely, if it , call for a funds rate increase later this year. i think that's a fair summary of
the committee's assessment of things. i think you've also asked me about uncertainty about our own policies? >> the fact with market turbulence, people concerned about the fed about to raise interest rates. you did not mention that is one reason for the turbulence. the main drivers of the turbulence have been concerns about the global outlook. that is how i read it. of course i know there is uncertainty about fed policy. as i mentioned, we are well aware that there has been a huge focus on the decision today. i would ask you to appreciate that there are a lot of crosscurrents in economic and that wel developments need to take into account in deciding on what the appropriate course of policy is.
not make continuous decisions every single they about our policy. we meet periodically. darndest to pull together the best analysis we intonto exchange views arriving at committee decisions. i do understand during this time that every word that an fomc member has said has been the that for its potential implications for what our decision will be. i think that's an unfortunate state of affairs, but i understand and i think it's natural when you are at a point when conditions may be falling in place for there to be a shift in policy. it's natural that should have been. extent, to some contribute to uncertainty in financial markets. michelle, bbc news perry and
talked about the strong dollar. do you see your policy actions affecting the dollar? is it something you're considering when you make a policy decision? so monetary policy -- u.s. monetary policy -- is directed towards trying to achieve the goals the congress has laid out for us. when monetary policy titans and interest rates rise, it commonly is the case either when it happens or an expectation that interest rate differentials globally do tend to induce capital flows that have impacts on exchange rates. often hasy policy
some effect on the exchange rate . it is not in my view the main channel by which monetary policy works. it's one of a number of different channels by which monetary policy works, but it does have some impact on exchange rates. yes, we need to take that into account. >> greg from market watch. i wanted to see if you would shift gears a little to talk about the housing market. you said in a statement that it has improved. how much are you counting on the housing market for growth going or especially since the committee sees rates rising? thank you. we are envisioning further improvements in the housing market. depressed.very housing starts are below levels
that seem consistent with underlying demographics, especially in an economy that is creating jobs. we had lots of people who are forl double the and demand housing should be there and should materialize as the job market improves and income growth improves. are we counting on it? housing is now a very small sector of the economy. and --ot the driver of ais is my own forecast -- driver of ongoing improvements in the u.s. economy. , butays a supporting role consumer spending is the main by decentstered outlook for investment spending.
but i would continue to expect housing to improve. , ifmber we are envisioning things go as we anticipate, a of increasesl path in short-term interest rates over time to some extent that is already embodied in longer-term rates. on the other hand, as time passes and you move beyond the window and short rates are zero, it will be natural for rates to rise some. we recognize that the housing market is sensitive to mortgage -- market rates. it's an important factor. that is something we are definitely taking into account in thinking about the appropriate path of policy. nancy from market place. you mentioned you got a lot of unsolicited advice.
there's another side that says the fed should raise interest rates because keeping rates so low for so long has actually exacerbated the wealth gap. you think the fed has widened the wealth gap with its low interest rate policy? people say that it mainly benefits the wealthy. iti guess i really don't see that way. it's true that interest rates affect asset prices, but they have complex effects for balance sheets, liabilities and assets. me, the main thing that an accommodative monetary policy does is put people back to work. and since income inequality is by havingcerbated high unemployment and a weak job market that has the most profound negative effects on the most vulnerable individuals, to
back to workople and seeing a strengthening of that has aarket disproportionately favorable effect on vulnerable portions of our population, that's not something that increases income inequality. there have been a number of donees that have been recently that have tried to take account of many different ways actingh monetary policy through different parts of the transmission mechanism affects inequality. there's a lot of guesswork involved and different analyses, with different things, but a pretty recent paper is quite concludes that fed policy has not exacerbated income inequality.
>> thank you. john prior with politico. what would a -- what role would a possible government shutdown play in your vote today? what would you say to lawmakers pursuing the strategy? >> it played absolutely no role in our decision. i believe it is the responsibility of congress to pass the budget, to find the government, to deal with the debt ceiling so that america pays its bills. we have a good recovery in place that's really making progress and to see congress take actions that would endanger that begress, i think that would more than unfortunate. to me, that's the job of
congress. congress charged us with warming and economic outlook that is focused on the medium term taking appropriate policy actions based on that outlook and that is what we've done in the past and will continue to do going forward. >> madam chair, you said in your opening statement that the fed's policy of maintaining a large balance sheet by not starting to shrink the balance sheet by curtailing re-investments and rollovers help set your accommodative monetary stance on top of the near zero federal funds rate. by delaying rate hikes logically are you not also delaying reducing the balance sheet? one euro ago the he said it would start shrinking the
balance sheets until they started raising the funds rate. you areconcern that delaying normalization of the balance sheet? was that an issue you and your colleagues discussed? thank you. been and as was reported in the minutes of our july meeting, we have been discussing reinvestment policy. our normalization principles indicated that we would not begin to either reduce or eliminate reinvestments until after we have begun to raise the federal run -- funds rate. the exact timing of that would on economic and financial conditions and our evaluation of them. bet guidance continues to
accurate. we do not have anything further, but it is certainly true that we to beginitted to wait running down our balance sheet until after we've begun the process of normalization. yes, if we defer, it's not a very large matter we are talking about from a stimulus point of view, but it is to some extent true that if we delay our raising the rate it will maybe delay the timing at which that process will begin. there is no fix. we've not given some fixed amount of time of so many months after we start. we're continuing to discuss what the appropriate timing with the of that policy and have not made any further decisions on that just yet.
[captioning performed by the nation [captions copyright national cable satellite corp. 2015] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] the federal reserve decided to leave interest rates unchanged. more about that on "washington journal" which is up next live with your phone calls. later this morning at 9:00 eastern, the house will come into debate and vote on to abortion related bills. one would de-fund planned parenthood for your if the organization does not stop abortion procedures while e-house house investigation into undercover videos of the group is ongoing. the other would an act protections for infants born alive during abortion procedures. the house is live here on c-span. later, congressman jim himes will continue the conversation on interest rates and a possible timeline for a rate hike. house budget committee member
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