Federal Reserve press conference, 2017-06-14 — Chair Janet Yellen

Question (Nick Timiraos, Wall Street Journal): Nick Timiraos of the Wall Street Journal. Chair Yellen, the principles you released today say the balance sheet wind-down should commence once interest rate normalization is “well under way.” With this latest rate increase, do you believe normalization is now well under way?
Answer: So that is something that we’ve said for some time, and I’ve previously—when I’ve been asked what “well under way” means—said that I don’t want to define that in purely quantitative terms but rather in qualitative terms. So there’s no specific level of the federal funds rate that means we’re well under way. But it’s also a question of not only the current level, but our confidence in the outlook and our projections for the future path of the federal funds rate. So we have increased our federal funds rate target now several times. Our outlook is that we anticipate further increases this year and next year for the federal funds rate, and our statement indicates that if the economy continues to evolve in the manner that we expect, that we would feel the conditions are in—will be in place to begin this process this year.