Federal Reserve press conference, 2016-09-21 — Chair Janet Yellen

Question (Rebecca Jarvis, ABC News): Rebecca Jarvis, ABC News. Chair Yellen, at a time when the public is losing faith in many institutions, did the FOMC discuss the importance of today as an opportunity to dispel the thinking that the Fed is politically compromised or beholden to markets?
Answer: The Federal Reserve is not politically compromised. We do not discuss politics in our meetings. I can’t recall any meeting that I have ever attended where politics has been a matter of discussion. I think the public, if they had been watching our meeting on TV today, would have felt that we had a rich, deep, serious, intellectual debate about the risks and the forecasts for the economy, and we struggled mightily with trying to understand one another’s points of view and to come out at a balanced place and to act responsibly. And that’s my commitment to the American people, that I want to lead an institution that is not political and is—that we are striving to do our very best to pursue the goals the Congress has assigned to us, which are important ones of price stability and maximum employment.

Question (Michael Derby, Dow Jones Newswires): Hi, Mike Derby from Dow Jones Newswires. A large number of congressional Democrats as well as the campaign of Hillary Clinton would like bankers removed from the boards overseeing the regional Fed banks. Also, other reformers would like to see the private ownership of the regional—the bank ownership of the regional Feds ended and that the regional Feds be brought fully into government, and I wanted to know what you thought of those two proposals.
Answer: So we have a system that Congress did set up in the Federal Reserve Act in which the governance of the Reserve Banks involves banks contributing capital and serving on the boards of directors. We have long recognized inside the Federal Reserve that when we’re charged with supervision of banks, having bankers involved in that obviously presents conflict of interest. And we have put in place very strong measures to ensure that those conflicts of interest are not allowed to play out in any—in any way, that bankers are not allowed to be involved in supervision. Dodd-Frank changed the arrangement so that only the Class B and C, or nonbanking, directors can participate in the selection of the president as well. So I think—I want to make sure the public has confidence that, in spite of the fact that we do have this banker involvement in our boards of directors, that it is not giving rise to any conflicts in our actual conduct of policy. Now, that setup—if that setup is changed, it raises which—it’s up to Congress to decide what to do here. It raises complex issues about the governance—the whole governance arrangement in the Reserve Banks in the Federal Reserve, and I would simply caution that if that is looked at, as Congress is entitled to do, that they think through carefully what the ramifications of making changes would be.

Question (Mark Hamrick, Bankrate): Thank you, Madam Chair, Mark Hamrick with Bankrate.com. As we’ve gotten to this 4.9 percent unemployment rate, as you know, through this year’s long recovery, we have yet to see substantial pickup in wage growth. And it seems as if the American middle class continues to express some disappointment about that. Is there better news on the horizon? Do you think it could come in 2017, for example, and if not, when?
Answer: So I think we have seen some modest pickup in wage growth. It’s running a little bit higher than it was over the last two years by a number of important measures. And we have seen income growth pick up recently. I think the Census report was encouraging, showing that there are income gains, both because of more jobs and higher-paying jobs, and that that’s occurring throughout the income distribution. It’s helping many families. But I do expect—we expect the unemployment rate to decline further, we expect labor market conditions to continue to improve. And my hope and expectation is that we will see some further pickup in wage growth, and that it will be broadly beneficial to American households.