FOMC Press Conference September 17, 2015

TL;DR

The Federal Reserve has decided to delay a rate hike due to concerns over global economic and financial risks and below-target inflation.

Transcript

CHAIR YELLEN. Good afternoon. As you know from our policy statement released a short time ago, the Federal Open Market Committee reaffirmed the current 0 to 1/4 percent target range for the federal funds rate. Since the Committee met in July, the pace of job gains has been solid, the unemployment rate has declined, and overall labor market conditio... Read More

Key Insights

• ☠️ The Fed's decision to delay the rate hike reflects concerns about global economic and financial risks and below-target inflation.
• ☠️ The timing of the initial rate increase is less important than the overall expected path of interest rates, which is expected to be gradual.
• 🤨 The Fed expects further improvement in the labor market and confidence that inflation will move back to its 2% target before raising interest rates.
• 🫵 The Fed views recent global economic and financial developments as likely to put downward pressure on inflation in the near term.

Questions & Answers

Q: Why did the Federal Reserve decide to delay the rate hike?

The Fed is concerned about global economic and financial risks, particularly uncertainties in China and other emerging market economies, as well as below-target inflation. These factors led them to delay the rate hike.

Q: What is the Fed's outlook for the US economy?

The Fed sees solid job gains and a declining unemployment rate in the US. They expect a moderate pace of GDP growth, supported by household spending and business fixed investment. However, they also note that net exports have been a drag on GDP growth.

Q: When will the Fed consider raising interest rates?

The Fed will consider raising interest rates when there is further improvement in the labor market and confidence that inflation will move back to its 2% target over the medium term.

Q: How does the Fed view the impact of recent global developments on the US economy?

The Fed recognizes that recent global economic and financial developments, such as concerns about China and other emerging market economies, have created uncertainty and may put downward pressure on inflation in the near term. However, they do not expect these developments to have a significant impact on the overall outlook for the US economy.

Summary & Key Takeaways

• The pace of job gains in the US has been solid and the unemployment rate has declined.

• Inflation is running below the Fed's target, but is expected to gradually increase as the labor market improves.

• Recent global economic and financial developments, such as concerns about China and other emerging market economies, have created uncertainty and may put downward pressure on inflation in the near term.

• The Fed expects the first increase in the federal funds rate to occur when there is further improvement in the labor market and confidence that inflation will move back to its 2% target over the medium term.

• The timing of the initial rate increase is less important than the overall expected path of interest rates, which is expected to be gradual.