Breaking: Yellen to Continue Tapering

Credit: Federal Reserve

Credit: Federal Reserve

Yellen in her remarks and press briefing:

“The dots moved down a little bit in December relative to September and then moved up ever so slightly. I really don’t think it’s appropriate to read very much into it.”

“We have had a series of years now in which growth has proven disappointing.”

“5 percent of the labor force working part time on an involuntary basis, that is an exceptionally high number relative to the measured unemployment rate, and it’s so to my mind is a form of slack that is, adds to what we see in the normal unemployment rate, and is unusually large.”

“My predecessor was also devoted to that. Strengthening the financial system is a work in progress, and he made large inroads in strengthening the financial system.”

Yellen has stated the Federal Reserve will maintain tapering. Beginning in April, the Committee will add to its holdings of agency mortgage-backed securities at a pace of US$ 25 billion per month rather than US$ 30 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of US$ 30 billion per month rather than US$ 35 billion per month.

Federal reserve officials are perceiving the federal funds rate at the end of 2015 should be at least 1 percent.

In the statement, the Committee acknowledged that although unemployment has neared its target of 6.5 percent, “economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.”

To add more, the FOMC statement in regard to the federal funds rate, “This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments.”

Federal reserve officials are perceiving the federal funds rate at the end of 2015 should be at least 1 percent, a more optimistic read from the previous press meeting

Yellen served as vice-chair to Ben Bernanke. The benchmark federal funds rate has been practically at zero since late 2008. The U.S. unemployment rate and continued slack in labor markets has kept that rate low.



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