FOMC Press Conference December 13, 2017

TL;DR

Federal Reserve raises interest rates, optimistic outlook on economic growth and labor market, monitoring inflation closely.

Transcript

CHAIR YELLEN. Good afternoon. Today the Federal Open Market Committee decided to raise the target range for the federal funds rate by 1/4 percentage point, bringing it to 1-1/4 to 1-1/2 percent. Our decision reflects our assessment that a gradual removal of monetary policy accommodation will sustain a strong labor market while fostering a return of... Read More

Key Insights

• 🚕 Tax policy's potential stimulus on GDP growth and labor market strength.
• 🎯 Importance of monitoring inflation closely to achieve 2 percent target.
• 🎯 Balanced economic risks but heightened focus on achieving inflation targets.
• 💱 Federal Reserve's commitment to financial stability amid changing market dynamics.
• ❓ Emphasis on regulatory reforms and adjusting monetary policy for economic growth.
• ❓ Consideration of future policy decisions amid potential economic fluctuations.
• 💪 Strategic considerations for maintaining a strong labor market and stable inflation.

Questions & Answers

Q: How does the Federal Reserve view the impact of tax policy on economic growth?

The Federal Reserve sees the tax policy providing some lift to GDP growth in the coming years, boosting consumer and capital spending.

Q: What factors are contributing to lower wage growth despite a low unemployment rate?

Wage growth remains modest due to slow productivity growth, reflecting the overall health of the labor market without signs of overheating.

Q: Does the Federal Reserve see any risks associated with asset valuations, particularly in the stock market?

While asset valuations are marked as "elevated," the Federal Reserve sees balanced risks and does not view it as a major factor shaping monetary policy at present.

Q: What ongoing challenges does the Federal Reserve face in achieving its 2 percent inflation target?

Despite strong economic growth, inflation has persistently undershot the 2 percent target, with transitory factors currently cited as holding inflation down.

Summary & Key Takeaways

• Federal Reserve raises interest rates by 1/4 percentage point to 1-1/4 to 1-1/2 percent.

• Strong labor market, moderate economic expansion, expect inflation to return to 2 percent.

• Tax policy's impact on growth, labor market strength, emphasis on monetary policy adjustments.