FOMC Press Conference March 18, 2015 | Summary and Q&A

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March 18, 2015
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Federal Reserve
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FOMC Press Conference March 18, 2015

TL;DR

Chair Yellen reaffirms current federal funds rate target range; indicates possibility of rate increase in the future.

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Key Insights

  • ๐Ÿงก The FOMC's current target range for the federal funds rate remains appropriate, but an increase in the target range could be warranted in the future.
  • ๐Ÿ™ˆ The labor market has seen continued improvement, but there is still room for further progress and wage growth remains sluggish.
  • ๐Ÿข Economic growth has slowed in the first quarter of 2015, but the Committee expects moderate growth with job gains and lower energy prices supporting household spending.

Transcript

CHAIR YELLEN. Good afternoon. As you know, the Federal Open Market Committee this afternoon reaffirmed the current 0 to one quarter percent target range for the federal funds rate. We also updated our forward guidance, indicating that an increase in the target range for the federal funds rate remains unlikely at our next meeting in April. With cont... Read More

Questions & Answers

Q: Does the FOMC expect to raise interest rates at the April meeting?

No, the indication is that an increase in the target range for the federal funds rate remains unlikely at the April meeting, but could be warranted at subsequent meetings depending on economic conditions.

Q: How does the FOMC assess the current labor market?

The FOMC sees continued progress toward maximum employment, with strong job gains and a declining unemployment rate. However, there is still room for further improvement and wage growth remains sluggish.

Q: How has the stronger dollar affected the US economy?

The strong dollar has weakened export growth and pushed down import prices, resulting in lower inflation. It is expected to serve as a drag on economic growth, but overall the Committee sees sufficient strength in the US economy.

Q: How does the FOMC decide when to raise rates?

The timing of the initial increase in the target range for the federal funds rate will depend on the Committee's assessment of incoming information, including labor market conditions, indicators of inflation pressures, and readings on financial and international developments.

Summary & Key Takeaways

  • Federal Open Market Committee (FOMC) will maintain current target range for federal funds rate.

  • Forward guidance updated to indicate rate increase is unlikely at April meeting, but possible at subsequent meetings.

  • Continued improvement in economic conditions will affect timing of rate increase.

  • Economic growth has slowed in Q1 2015, but Committee expects moderate pace of growth with job gains and lower energy prices supporting household spending.

  • Inflation has declined due to lower energy prices, but is expected to move gradually back toward 2 percent objective over medium term.

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