FOMC Press Conference March 15, 2017 | Summary and Q&A

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March 15, 2017
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Federal Reserve
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FOMC Press Conference March 15, 2017

TL;DR

The Federal Reserve has decided to raise the federal funds rate by 0.25% due to the economy's progress towards employment and price stability objectives.

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Key Insights

  • πŸ‘Ύ The economy continues to expand at a moderate pace with solid income gains and high consumer sentiment.
  • 😘 Job gains have maintained a solid pace, and the unemployment rate remains near its recent low.
  • πŸ§‘β€πŸ€β€πŸ§‘ Inflation is expected to increase, with overall inflation stabilizing around 2% over the next couple of years.
  • πŸͺ‘ The FOMC's decision reflects the ongoing progress of the economy and the need to gradually remove policy accommodation.

Transcript

Transcript of Chair Yellen's Press Conference March 15, 2017 CHAIR YELLEN. Good afternoon. Today the Federal Open Market Committee decided to raise the target range for the federal funds rate by ΒΌ percentage point, bringing it to to 1 percent. Our decision to make another gradual reduction in the amount of policy accommodation reflects the economy'... Read More

Questions & Answers

Q: What factors led the FOMC to decide on a rate increase?

The decision was based on the continued progress of the economy towards employment and price stability objectives, as well as solid income gains, consumer sentiment, and business investment.

Q: How does the FOMC view the future of job conditions and inflation?

The FOMC expects job conditions to strengthen further and core inflation to move up, with overall inflation stabilizing around 2% over the next couple of years.

Q: What is the neutral level of the federal funds rate, and how does it affect monetary policy?

The neutral level of the federal funds rate, which keeps the economy operating on an even keel, is currently low but expected to rise gradually. Additional gradual rate hikes are likely to be appropriate to sustain economic expansion.

Q: How would a rapid rate of increases be defined, and why is gradual rate increase favored?

The median projection for the federal funds rate suggests a total of three rate increases this year, which qualifies as gradual. Gradual rate increases are favored because the neutral rate is low relative to historical standards.

Summary & Key Takeaways

  • The Federal Open Market Committee (FOMC) raised the target range for the federal funds rate by 0.25% to 1%.

  • The decision reflects the ongoing progress of the economy towards employment and price stability goals.

  • The economy is expanding at a moderate pace, with solid income gains and high levels of consumer sentiment and wealth supporting household spending growth.

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