FOMC Press Conference September 17, 2014 | Summary and Q&A

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September 17, 2014
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Federal Reserve
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FOMC Press Conference September 17, 2014

TL;DR

Fed Chair Yellen discusses the Federal Open Market Committee's decision to make another reduction in asset purchases and maintain a highly accommodative stance of monetary policy. She also introduces the Committee's approach to normalizing policy in the future.

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Key Insights

  • 📼 The FOMC has decided to reduce asset purchases and maintains its accommodative stance of monetary policy.
  • 🔬 The labor market has improved, but there is still underutilization of labor resources.
  • 🎯 Inflation has been below the Fed's objective, but they expect it to gradually move towards their target.
  • ☠️ The Fed's plan for interest rates is based on the economic outlook and progress towards their employment and inflation goals.
  • 🥹 The Committee expects to gradually normalize policy and reduce securities holdings in a predictable manner.
  • 🙈 The Fed sees ongoing improvement in the labor market and moderate economic growth.
  • ☠️ There is uncertainty about the timing and pace of interest rate increases, as it depends on economic conditions.

Transcript

CHAIR YELLEN. Good afternoon. The Federal Open Market Committee concluded its meeting earlier today and, as usual, released its monetary policy statement. The Committee also released a document describing the approach the Committee intends to take when, at some point in the future, it becomes appropriate to begin normalizing the stance of policy. L... Read More

Questions & Answers

Q: What is the FOMC's approach to normalizing policy in the future?

The FOMC will adjust the stance of monetary policy primarily through actions that influence short-term interest rates, such as the federal funds rate. They will also gradually reduce securities holdings and cease reinvesting repayments of principal on securities.

Q: Why is the Fed maintaining a highly accommodative stance of monetary policy?

The Fed believes there is still underutilization of labor resources and inflation remains below their 2 percent objective. They want to ensure ongoing improvement in the labor market and gradually move inflation towards its target.

Q: How does the FOMC view the current economic conditions?

The FOMC sees the economy as continuing to make progress towards their objective of maximum sustainable employment. Although GDP growth has been modest, spending and production in the third quarter suggest moderate expansion.

Q: What is the Fed's plan for interest rates?

The Fed intends to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends. They will adjust interest rates based on the economic outlook and progress towards their employment and inflation objectives.

Summary & Key Takeaways

  • The Federal Open Market Committee (FOMC) has made another reduction in asset purchases and maintained a highly accommodative stance of monetary policy.

  • The labor market has improved, but there is still underutilization of labor resources.

  • Inflation has been below the Committee's objective, but this is expected to change gradually.

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