Federal Reserve press conference, 2017-03-15 — Chair Janet Yellen

Question (Steve Liesman, CNBC): Steve Liesman, CNBC. Both the OECD and the IMF have raised their forecasts, in part because of—for the U.S. growth—in part because of the policies expected from the new Administration, yet the Fed has not. And I take it from your comment at the very beginning that this—these forecasts today represent no reassessment. Has the Committee discussed what policy might look like in the event that there are large tax cuts passed or infrastructure spending passed? And what might policy look like if those policies become law? Finally, why did you remove the word “only” before the word “gradual” when you talked about future rate increases?
Answer: So we have not discussed in detail potential policy changes that could be put into place, and we have not tried to map out what our response would be to particular policy measures. We recognize that there is great uncertainty about the timing, the size, the character of policy changes that may be put in place and don’t think that that’s a decision, or a set of decisions, that we need to make until we know more about what policy changes will go into effect. So I do want to emphasize that, while some participants have penciled in some fiscal policy changes into their projections, that the basis for today’s decision is simply our assessment of the progress of the economy against our long-established goals of maximum employment and price stability. There’s nothing that we have done or anticipate that is a speculation. I think it’s fair to say, there’s nothing that’s a speculation about preemptive responses to future policy moves. We have plenty of time to see what happens. We did remove the word “only” in the statement today from “gradual.” I think this is something that shouldn’t be overinterpreted. I regard it as a relatively small change and think it’s appropriate for you to consider it in the context, for example, of the fact that our economic projections are virtually identical to those that we issued in December. They’re essentially unchanged both in terms of the path of the economy and the path of the federal funds rate. So we have carried out a modest adjustment of the federal funds rate because we’ve seen the economy progressing over the last several months in exactly the way that we anticipated. We haven’t in any way changed our view about where the economy is heading or the risks. We had long said that if the economy progressed, and—it’s, you know, it’s been doing nicely, I think, in making progress, in showing resilience, and we have, you know, have some confidence in the path the economy is on. And if we continue to feel that, we will likely regard it as appropriate to make some further moves to scale back accommodation to move toward neutral, along the lines in the SEP. Now, obviously, there are surprises. Our economic forecasts can change. But the word “gradual,” I think, emphasizes that if things continue in the manner that we’ve been going, as we have said now for quite some time, we think that gradual—some gradual increases in the federal funds rate—will be appropriate. And this is not a, you know, this is not a significant—this is not a significant change.