Federal Reserve press conference, 2017-09-20 — Chair Janet Yellen

Question (Binyamin Appelbaum, New York Times): Do you, in fact, have room in the next two or three years to respond to an economic downturn?
Answer: So, certainly, if growth is stronger or if inflation picks up more rapidly, we have room. We have a certain amount of room now, and we have raised the funds rate four times. We believe that we are on a path where there will likely be further increases over the next couple of years, which will give us greater room, and we think the recovery is on a strong track. So the reason for our actions today in beginning to run down the balance sheet is, we think the economy is performing well and we have confidence in the outlook for the real economy. But, of course, there are shocks, and if the negative shock to the economy were sufficient, we recognize that we might be unable to pursue objectives purely by cutting the federal funds rate, and that is why we say explicitly that we would be prepared, in that event, to resume reinvestment, and other tools that we used in the financial crisis—forward guidance— would also be available to us.

Question (James Puzzanghera, Los Angeles Times): Thanks. Jim Puzzanghera with the L.A. Times. Chair Yellen, your term expires as Chair in February. Have you had a chance to meet with or discuss your situation with President Trump yet? And if so, what were your impressions of him and what he’s looking for from the Federal Reserve?
Answer: So I have said that I intend to serve out my term as Chair, and that I’m really not going to comment on my intentions beyond that. I will say that I have not had a further meeting with President Trump. I met with him early in my term, and I’ve not had a further meeting with him.1

Question (Heather Long, Washington Post): Heather Long from the Washington Post. As you know, Congress is considering a major tax reform package. Do you or any of the Committee members have concerns if that package does not end up being deficit neutral and ends up adding to the debt? Would that be problematic for the economy?
Answer: Look, that’s something that’s a matter for Congress and the White House to decide. You know, I’ve put forward a few principles about fiscal policy that I would reiterate, that one of the problems that the American economy suffers from, along with many other economies around the globe, is slow productivity growth, and I think it would be very desirable if a fiscal package had the potential in it to create incentives that would raise productivity growth. We do face, in terms of longer-term deficits as the population ages, an unsustainable debt path that will require, I believe, some adjustments to fiscal policy, and I hope Congress will keep that in mind. But beyond a few core principles, it’s really—I don’t want to weigh in on details.