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Janet Yellen holds press conference after US Federal Reserve raises interest rates - live updates Janet Yellen says 'US economy is doing well' after raising interest rates - live updates
(35 minutes later)
7.32pm GMT
19:32
Last question:
Q: Some people think it’s too early to raise interest rates, because wage growth has been too low.
I would like to see wages increase, and think there is scope for them to increase further, Yellen replies.
But, the Fed’s goal is to achieve maximum employment and low, stable inflation. That’why it hiked the Fed funds rate to 1% today.
She also points out that slow productivity growth has been holding down wage rises.
7.24pm GMT
19:24
Asked about regulatory issues, Yellen replies that the Fed has a “relatively light” regulatory agenda at present.
There’s nothing we need to get out right now, she adds.
Updated
at 7.32pm GMT
7.20pm GMT
19:20
Yellen is asked about the possibility of a border tax.
She says it’s “very uncertain” how the dollar would be affected by such a move.
7.19pm GMT
19:19
Q: The Fed’s statement today says that your inflation target is symmetric - so how high would you be happy to see inflation rise?
Two percent inflation is not a ceiling, it’s a target, Yellen replies. There will be times when it will be above that target.
If inflation appears to be persistently over target, though, the Fed would have to take action.
7.17pm GMT
19:17
Yellen: The economy is doing well
Q: What message are you trying to send to US consumers with this interest rate hike?
Great question, Yellen replies, before declaring:
The simply message is that the economy is doing well
She adds that the Fed has confidence in the economy, and its resilience to shocks. The labor market is strengthening - although obviously not everyone is feeling the benefits.
Fed Chair Yellen on what her message to consumers is with today's rate hike: "The economy is doing well." https://t.co/qcDqs8EGGW pic.twitter.com/CAdmNZVDLF
7.13pm GMT
19:13
Yellen is asked about calls for a new Glass-Steagall Act (to prohibit commercial banks getting involved in risky investment banking).
“I don’t know what a 21st century Glass-Steagall would look like,” Yellen replies wryly.
But she doesn’t think that the repeal of Glass-Steagall (during Bill Clinton’s presidency) was a major factor causing the financial crisis.
Updated
at 7.14pm GMT
7.10pm GMT
19:10
Q: The latest GDP figures weren’t very impressive, unemployment hasn’t changed much, and consumer spending isn’t roaring - so why do you feel forced to raise interest rates today?
Yellen replies that GDP is quite a ‘noisy’ indicator. Other economic data suggests the economy continues to strengthen.
SPOTTED: GDP as defined by Janet Yellen#Noisy pic.twitter.com/s6ZjYV3yoY
Q: So what if the economy doesn’t strengthen? Might you raise rates less rapidly than you expect?
Policy isn’t preset, Yellen replies, and it depends on the data*. The Fed will act in a way that encourages further job creation while bringing the real interest rate back towards its neutral level.
* - unless it’s ‘noisy’, I guess....
7.04pm GMT
19:04
Q: Are you worried about the consequences if Donald Trump’s proposed tax cuts and spending increases aren’t enacted?
Yellen says there is an obvious, notable shift in sentiment - but there’s no sign that this has translated into higher spending. The Fed is watching closely in case this changes.
Yellen: "I haven’t seen hard evidence of any change in spending decisions based on expectations about the future.”
7.01pm GMT
19:01
On the global economy, Yellen says the situation has improved.
But there are still uncertainties, which G20 finance ministers and central bankers will discuss at their meeting this weekend.
7.00pm GMT7.00pm GMT
19:0019:00
Yellen is asked about the recent strong stock market rally.Yellen is asked about the recent strong stock market rally.
She says that the higher level of equities has helped to ease financial conditions.She says that the higher level of equities has helped to ease financial conditions.
Yellen: Financial conditions on balance have eased, that's partly driven by stock market. That is a factor that affects outlook.Yellen: Financial conditions on balance have eased, that's partly driven by stock market. That is a factor that affects outlook.
6.57pm GMT
18:57
Frances Donald of Manulife Asset Management believes Yellen will be pleased to see the dollar falling.
Janet Yellen wins today if she manages to tighten rates and USD ends the day lower. There is no better outcome for the Fed than that.
But John Kicklighter of DailyFX isn’t convinced that the language changes in today’s statement don’t really matter.
Steve Liesman went there. He asked why they left out the word 'only' in a segment or the statement
...and she responds coyly, suggesting it is a trifle change of language. Yellen is fooling no one. They clearly chose every word carefully
6.55pm GMT
18:55
Q: What do you think the neutral real rate of borrowing costs is?
Yellen says that lower productivity, and population increases, means that the neutral rate is lower than in the past.
Yellen: neutral real rate about 1% or a bit lower.
6.51pm GMT
18:51
Q: Have you met with new Treasury secretary Steven Mnuchin since he was appointed? And have you met Donald Trump?
Yellen says she has met Mnuchin a couple of times, and fully expects to have a strong relationship with him.
She’s also had a “very brief meeting” with the president, and appreciated that opportunity.
Updated
at 6.52pm GMT
6.49pm GMT
18:49
Q: Has the Federal Reserve considered the implications of Donald Trump’s fiscal stimulus plan?
Yellen says they’ve not discussed it, as there is “great uncertainty” over the character and size of potential policy changes.
Yellen says Fed not planning for @realDonaldTrump policies...
Q: Why did you remove the word ‘only’ before the phrase ‘gradual increases in interest rates” in today’s statement?
It’s a relatively small change, Yellen says. Our forecasts for the economy and the federal funds rate are virtually unchanged.
6.45pm GMT
18:45
Q: You warned that if the Fed were to waiting too long to raise rates, it could be forced into a “rapid” increase in rates. What would this look like?
Yellen says that she can’t really say what a rapid rate of increases would be. But three rate hikes in a year is certainly ‘gradual’.
Yellen: "I’m not sure I can tell you what a rapid rate of increase is." Says 3 rate hikes this year would be "gradual."
6.42pm GMT
18:42
Onto questions.
Q: What conditions does the Fed want to see before it starts to normalise its balance sheet? (ie, selling some of the assets bought under its stimulus programme since the financial crisis).
Yellen says the Fed favours using interest rates, rather than balance sheet adjustments, as their primary tool right now.
She points out that the Fed could use its balance sheet if interest rates were cut back down to their lowest possible levels (the zero lower bound).
And the Fed will want to be confident in the strength of the economy before starting to shrink the balance sheet.
6.39pm GMT
18:39
The economic outlook is ‘highly uncertain’, Yellen continues, adding that policy is not on a preset course.
Fed’s Yellen: Economic Outlook Is Highly Uncertain
6.38pm GMT
18:38
Monetary policy is still accommodative, after today’s rate rises, Yellen says.
She warns that if the Fed were to wait too long before normalising policy, it could be forced to raise borrowing costs more rapidly “sometime down the road”, causing disruptions in the financial markets.
And it’s likely that the ‘neutral’ level of interest rates is lower than the historical average.
6.35pm GMT
18:35
Yellen sounds confident about the labor market, saying Fed policymakers “expect that job conditions with strengthen somewhat further.”
6.34pm GMT
18:34
Yellen says that today’s interest rate hike is in response to the ongoing recovery in the US economy, and improved conditions in the labor market.
Our decision to make another gradual reduction...reflects the economy’s continued progress toward its employment/price stability objectives, the Fed chair explains.