Janet L. Yellen on Federal Reserve

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Last quote by Janet L. Yellen on Federal Reserve

Economic activity in the United States has been growing moderately so far this year, and the labor market has continued to strengthen. The terrible hurricanes that hit Texas, Florida, Puerto Rico, and our neighbors in the Caribbean caused tremendous damage and upended many lives, and our hearts go out to those affected. While the effects of the hurricanes on the U.S. economy are quite noticeable in the short term, history suggests that the longer-term effects will be modest and that aggregate economic activity will recover quickly.feedback
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Oct 16 2017
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All quotes by Janet L. Yellen on Federal Reserve

We put in place, since the financial crisis, a set of core reforms that have strengthened the financial system. And in my personal view, it's important they remain in place. And those core reforms are: more capital, higher quality capital, more liquidity, especially in systemically important banking institutions. Stress testing and resolution plans, and those four prongs of improvements in banking supervision have really strengthened the financial system.feedback

We understand pretty well what the effects are on the economy. Market participants understand how that tool is used, and it would likely be adjusted in response to shocks to the economy. That's our go-to tool. That is what we intend to use.feedback

We take our supervision responsibilities of the company very seriously, and we are attempting to understand what the root causes of those problems are and to address them. I'm not able to discuss confidential supervisory information and not yet able to tell you, but we're committed to taking the actions we regard as necessary and appropriate to make sure the right set of controls are in place in that organization. We're working very hard on it.feedback

Evidence shows that reforms since the crisis have made the financial system substantially safer. While material adverse effects of capital regulation on board measures of lending are not readily apparent, credit may be less available to some borrowers, especially homebuyers with less-than-perfect credit histories and, perhaps, some businesses.feedback

Our more resilient financial system is better prepared to absorb, rather than amplify, adverse shocks, as has been illustrated during periods of market turbulence in recent years. Enhanced resilience supports the ability of banks and other financial institutions to lend, thereby supporting economic growth through good times and bad.feedback

I wouldn't be in favor of reducing capital for the most systemic banks.feedback

It's premature to reach the judgment that we're not on the path to 2 percent inflation over the next couple of years. We're watching this very closely and stand ready to adjust our policy if it appears the inflation undershoot will be persistent.feedback

I believe we have done a great deal since the financial crisis to strengthen the financial system and to make it more resilient. Some of them, yes.feedback

We need to conduct a thorough investigation to look at the full record ... We are certainly prepared to take enforcement actions.feedback

I'm going to pass, if you don't mind, on this question.feedback

It is challenging to move productivity growth up that much, but I hope that Congress and the administration will focus on changes that will succeed in accomplishing that.feedback

Of course, considerable uncertainty always attends the economic outlook. There is, for example, uncertainty about when – and how much – inflation will respond to tightening resource utilization. Possible changes in fiscal and other government policies here in the United States represent another source of uncertainty.feedback

The behavior that we saw was egregious and unacceptable and it is our job to understand what the root causes are of those failures. We are certainly prepared to take enforcement actions if those are appropriate. I haven't really decided that issue.feedback

There are shocks that impact the economy, and a negative shock could end the expansion. But I don't see anything inherent in the nature of the expansion that suggests it will come to an end anytime soon.feedback

In the last five years, productivity growth has averaged a half percent. The last decade, something like 1.1 percent.feedback

I will say that the behavior that we saw was egregious and unacceptable. We do have the power if it proves appropriate to remove directors. A number of actions already have been taken. We need to conduct a thorough investigation to look at the full record to understand the root causes of the problems. We are certainly prepared to take enforcement actions if those prove to be appropriate.feedback

Spending on health care is an important aspect of household budgets, and changes there could have an affect on spending on a wide range of goods and services in the economy. And access to health care is important.feedback

I think fiscal policy ... uncertainty is quite high at the moment.feedback

Ongoing job gains should continue to support the growth of incomes and, therefore, consumer spending; global economic growth should support further gains in US exports; and favorable financial conditions, coupled with the prospect of continued gains in domestic and foreign spending and the ongoing recovery in drilling activity, should continue to support business investment. These developments should increase resource utilisation somewhat further, thereby fostering a stronger pace of wage and price increases.feedback

Monetary policy is not on a pre-set course. We're watching it very closely and stand ready to adjust our policy if it appears that the inflation under-shoot will be persistent.feedback

We have a relatively light regulatory agenda at this point.feedback

Because the neutral rate is currently quite low by historical standards, the federal funds rate would not have to rise all that much further to get to a neutral policy stance. Because we also anticipate that the factors that are currently holding down the neutral rate will diminish somewhat over time, additional gradual rate hikes are likely to be appropriate over the next few years to sustain the economic expansion and return inflation to our 2 percent goal.feedback

To my mind, a prudent course is to make some adjustments as long as our forecast is that we're heading back to 2pc.feedback

What I previously said is that I absolutely intend to serve out my term.feedback

Wages and jobs of middle class families that have seen diminishing opportunities and downward pressure on middle class wages, we have to take effect of the technological change that have eliminated middle income jobs and globalization that has reinforced the impact of tech.feedback

For many years, many American companies have been sitting on a lot of cash and have been unwilling to undertake investment in the scale we would ideally like to see.feedback

A strengthening in economic growth abroad has provided important support for U.S. manufacturing production and exports.feedback

Such prescriptions cannot be applied in a mechanical way. Their use requires careful judgments.feedback

We're not targeting financial conditions. We're trying to generate paths for employment and inflation that meet our mandated objectives.feedback

We think it will be appropriate for the attainment of our goals to raise interest rates very gradually to levels that are likely to remain quite low, although there is uncertainty about this, to remain low by historical standards for a long time.feedback

By standard metrics, some asset valuations look high but there's no certainty about that.feedback

I would say that I've got a good working relationship [with Mnuchin]. I've found solid respect for the independence of the Fed.feedback

We want to keep the expansion on a sustainable path and avoid the risk that ... we find ourselves in a situation where we've done nothing, and then need to raise the funds rate so rapidly that we risk a recession. But we are attentive to the fact that inflation is running below our 2 percent objective.feedback

Our decision reflects the progress the economy has made and is expected to make.feedback

It's important not to overreact to a few readings, and data on inflation can be noisy. We continue to feel that with a strong labour market and with a labour market that's continuing to strengthen, the conditions are in place for inflation to move up.feedback

So what I've said about my own situation is I fully intend to serve out my term as chair, which ends in early February.feedback

For all practical purposes, Hong Kong delegated the determination of its monetary policy to the Federal Reserve.feedback

We think a gradual path of increases in short-term interest rates can get us to where we need to be, but we don't want to wait too long to have that happen.feedback

Young adults who regularly or sometimes worried when they were children about care, safety or having enough to eat are also less likely to be employed, less likely to have consistent income month-to-month and less likely to pay all of their current monthly bills in full, compared with those who never or rarely worried about these concerns as children.feedback

This research underscores the value of starting young to develop basic work habits and skills. These habits and skills help prepare people for work, help them enter the labor market sooner, meet with more success over time and be in a position to develop the more specialized skills and obtain the academic credentials that are strongly correlated with higher and steadier earnings. Ensuring that all of our kids have 'strong foundations' will help build a similarly strong foundation for the U.S. economy.feedback

We're operating in an environment where the U.S. economy is performing well and risks seem pretty balanced. I think people can feel pretty good about the economic outlook.feedback

The unemployment rate has moved way down and many more people feel optimistic about their prospects in the labor market. There's job security. We're seeing more people who are feeling free to quit their jobs, getting outside offers for other opportunities. So I think the job market, which is an important focus for us, is certainly improving.feedback

What we'd want to have is confidence in the economy's trajectory, a sense that the economy will make progress, that we're not overly worried about downside risks with adverse shocks that could hurt the economy.feedback

Our short-term interest rate target is our key active tool of policy. We think it's much easier using that tool to communicate the stance of policy. We have much more experience with it and have a better idea of its impacts on the economy.feedback

That is a great question. I appreciate your asking it. The simple message is the economy is doing well. We are seeing more people who are feeling free to quit their jobs, getting outside offers, looking for other opportunities. I think the job market which is an important focus for us is certainly improving. We know there are problems that face particularly people with less skill and education, and in certain sectors of the economy.feedback

At our meeting later this month, the (Federal Open Market) Committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate. Given how close we are to meeting our statutory goals (of maximum employment and price stability), and in the absence of new developments that might materially worsen the economic outlook, the process of scaling back accommodation (raising interest rates) likely will not be as slow as it was in 2015 and 2016.feedback

I really liked the form of reasoning. [Economics] has a way of analyzing issues that is systematic and it appealed to the math side of me.feedback

It came together that my concern about people and jobs, and my love of math, found a happy marriage in economics.feedback

Fiscal and regulatory policies – which are of course the responsibility of the administration and the Congress – are best suited to address such adverse structural trends.feedback

The economy has essentially met the employment portion of our mandate and inflation is moving closer to our 2 percent objective. [We] realize that waiting too long to scale back some of our support could potentially require us to raise rates rapidly sometime down the road, which in turn could risk disrupting financial markets and pushing the economy into recession.feedback

Nothing going on in these international discussions binds us to carry out things in our rule making process.feedback

I think central banks all over the world have recognized that an independent central bank that can focus on the long-term health of the economy . . . gives rise to a better economic environment.feedback

The economy has recovered more quickly, for example, than ... European Union economies have in the aftermath of the crisis. The Federal Reserve has put in place highly accommodative monetary policies meant to spur spending in the economy and restore low unemployment or to achieve the goal of maximizing employment and price stability as assigned to us by Congress. I believe we're coming very close to achieving those objectives, and monetary policy remains accommodative. Economic growth has been quite disappointing.feedback

The economy is recovering from a very severe crisis. We've put in place stronger financial regulation that has forced our banks to build up their capital buffers to deal with problem loans and to strengthen themselves to the point where they have been to support economic growth and recovery in our economy. The Federal Reserve has put in place highly accommodative monetary policies meant to spur spending in the economy and restore low unemployment or to achieve the goal of maximizing employment and price stability as assigned to us by Congress.feedback

Consumer spending has continued to rise at a healthy pace, supported by steady income gains, increases in the value of households' financial assets and homes, favorable levels of consumer sentiment, and low interest rates. Of course, it is too early to know what policy changes will be put in place or how their economic effects will unfold. While it is not my intention to opine on specific tax or spending proposals, I would point to the importance of improving the pace of longer-run economic growth and raising American living standards with policies aimed at improving productivity.feedback

We will continue to coordinate with the Treasury Department, which is itself a member of several international forums related to financial services, such as the Financial Stability Board (FSB) and the International Association of Insurance Supervisors, as well as with the other U.S. supervisory agencies that participate in various international forums.feedback

In exercising our longstanding authorities and responsibilities for consulting with our foreign counterparts, we share the objective that the whole U.S. government must work constructively to ensure a strong, stable U.S. economy and financial system. Strong regulatory standards enhance the stability of the U.S. financial system. By participating in the development of international regulatory standards, the Federal Reserve can influence the standards in ways that promote the financial stability of the United States and the competitiveness of U.S. firms.feedback

Waiting too long to remove accommodation would be unwise. At our upcoming meetings, the committee will evaluate whether employment and inflation are continuing to evolve in line with these expectations, in which case a further adjustment of the federal funds rate would likely be appropriate. I can't tell you which meeting it would be. Changes in fiscal policy or other economic policies could potentially affect the economic outlook. It is too early to know what policy changes will be put in place or how their economic effects will unfold.feedback

We don't want to base current policy on speculation about what may come down the line. We will wait to gain greater clarity on policy changes. We want to wait to start this process until the process of normalization is well underway. I can say emphatically, that partisan politics plays no role in our decisions about the appropriate stance of monetary policy. I believe we would have a much weaker economy if … we had followed the dictates of that rule.feedback

That's right. It's too early to know what policy changes will be put in place or how their economic effects will unfold.feedback

Precisely when we take an action -- March, May or June -- I can't tell you. I would say every meeting is live. I would also hope that fiscal policy changes will be consistent with putting U.S. fiscal accounts on a sustainable trajectory. While it is not my intention to opine on specific tax or spending proposals, I would point to the importance of improving the pace of longer-run economic growth and raising American living standards with policies aimed at improving productivity.feedback

Research by Federal Reserve staff suggests that, all told, U.S. monetary policy spillovers to other economies are positive – that is, policies designed to provide stimulus to the U.S. economy also boost activity abroad, as negative effects of dollar depreciation are offset by positive effects of higher U.S. imports and easier foreign financial conditions.feedback

The Federal Reserve is not politically compromised. We do not discuss politics in our meetings. I can't recall any meeting that I've ever attended where politics has been a matter of discussion.feedback

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Quotes by Janet L. Yellen on Federal Reserve

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