Keeping its forecast 1. 9 in 2018, not hitting desired 2 threshold until 2019. Quotes from the statement. 12 month basis overall inflation and inflation for items other than food and energy have declined this year and are running below two . Hurricanerelated disruptions and rebuilding affected economic, employment and inflation but have not materially altered the outlook for the national quon my. The committee continues to expect with gradual adjustments in the stance of Monetary PolicyEconomic Activity will expand at a moderate pace. To recap this, trish, the fed is raising Interest Rates from 1. 25 to 1 1 2 . It expects gdp to rise originally 2. 1 next year, to 2. 5 . Then a slowdown in 2019, falling back to 2. 1 and 2 in 2020. Back to you. Trish thank you so much, adam. Joining me right now with some analysis, bullseye brief founder adam johnson, digital risk managing partner, cofounder, jeff taylor. Sure vest Wealth Management ceo robert luna, American Action forum, douglas holtzeakin. Adam, start with you. So were hiking rates. Yep. Trish well hike three times perhaps in 2018 yet there is no inflation in the economist. Im just why are we doing this . I hear you. Theyre getting us back to normal. Rates are abormally low. If you look at 30 year mortgage, that is 3. 8 . That is half a point higher than alltime low. Rates are not incredibly low. If you have not bought a home and financed, lock in the rate, you bitter do it. Rates are the lowest they have ever been. Trish, all were doing is getting back to normal. Trish if you think what the fed is doing, alongside washington, d. C. Is trying to do, they file like boeing in two different directions, that the fed is trying to pull things back a little bit, rein things in despite prediction of relatively slow growth and no inflation, while d. C. Is out there trying to stimulate. How are these things going to Work Together . It is interesting, right. Insofar tax reform still to be seen what happens. The point he made a moment ago, this is lowest point of Interest Rates. Is 100 right. As far as Housing Market goes right now, Interest Rates rising , five year period, wages grown 10 . Mousing prices trish too much inflation in the Housing Market as far as youre concerned . Im sorry . Trish too much inflation in the Housing Market . In other words wages are not keeping up . Exactly. In a tight inventory all of sudden prices are up 40 . Wages 10 . So affordability from the firsttime homebuyer to moveup homebuyer really isnt there right now. Now you move into tax reform. What do we have there . Depending where you live, new york, new jersey, state income tax goes away, how, can i buy another house, move up, a lot is still to be determined. Trish youre concerned about what tax policy out of d. C. Will mean in some of these states that have very high property taxes like new york, new jersey, california as well, not to the same extent as new york and new jersey. You combine that with the fed raising rates and so it is that much more expensive to get a mortgage. What does this all do to the Housing Market . Is it going to soften things . I mean right now, price increases it definitely hits affordability, number one. , depending where you are could soften the market. Different states, you could see people moving to texas and florida because, it might be much more affordable overall as they look at total economic picture. So trish take this forward to robert luna for a moment, saying is the fed making a mistake right now. I dont think trish. I think this is normalization of policy. Lets not forget, we had the fed basically pulled the weight for d. C. For several years. Only tool was Monetary Policy d. C. Is getting act together with tax reform, albeit not tax reform we were hoping for but 21 Corporate Tax rate will make a difference in markets. I think quite honestly. They may be underestimating the growth ahead of us due to the fact theyre out of bullets but 21 , passthrough entity were looking for. This is fuel that can get the economy going. Trish talk about estimating of growth. Getting to douglas holtzeakin. They are talking about 2 . We need 3 and better especially deficits and debt were running. Yeah, certainly you would hope to get more out of combined efforts of tax reform, Regulatory Reform. What they will do in the next congress on entitlement reform and welfare reform. So, taken at face value this, is pretty negative grade for the tax effort. Now, it is not done yet. So they might not have built it into the forecasts for next year. Well see at the next fed meeting if they up grade it some. If you step back, i agree with a lot been said. Fed is normalizing rates. Theyre historically low. The second thing they have learned through bitter experience,. Com crash, then the great financial crash, their biggest concern has to be Downside Risk out of asset markets. Theyre not looking at commodity inflation as much as theyre looking at asset prices. So they are going to keep normalizing. It is appropriate, it is appropriate to hand the baton off to fiscal policy. Monetary policy has done all they can. Trish take that forward then. I agree, by the way, they did everything they could. They in many ways were responsible for some runup you saw in asset prices by making money so cheap. People had to put money in things like equities. Yeah. Trish adam, i guess the concern is, if the fed now moves to raise rates, and they have indicated not just today theyre doing this, but three times next year, does that create downside in the markets as you would no longer have the fed propping the markets up . Let me turn conventional wrist dom on its head. I say that tongueincheek because conventional wisdom already got turned on its head. They thought lower rates would stimulate the economy. Guess what. That didnt work. What is the definition of insanity, same thing over and over it doesnt have an impact. If lower rates are not necessarily stimulating the growth that we would like to see, maybe what you need to do is raise rates. By doing that, what youre doing is creating your again system youre forcing people to allocate capital more efficiently. You will invest if there is penalty for getting it wrong. Low rates there is no penalty. Gives you too much slack. That didnt stimulate the economy. Were turning conventional wisdom back to conventional wisdom. Trish i agree with that. They tried hard to stimulate the economy with no success, because they were fighting washington at time. They could have used more in terms of headwind on d. C. To get fiscal, monetary sides together. It is what it is. 1. 9 growth in 2018 . All theyre looking for, adam . Im shocked by that. Corporate earnings on track to grow this quarter, 12 . Im not sure why you necessarily take growth down he specially trish, if we get tax reform. Trish douglas holtzeakin are they affected at all by possible political views . Does that factor into anything looking at growth estimates . After all theyre only human beings . Im just as confused as everyone else why they have got these things down so are far. Weve seen natural momentum moving north. Seen really good orders for capital cap goods. Household sector is pretty strong. Im not sure where they see this tapering. I at least believe that, if you look at the core elements of the house and senate tax bills, the change in business taxation, to have better investment incentives, move to incentives to invest in the United States and abroad, that has to be a beneficial move for the economy. Trish perhaps they didnt look at it. Perhaps they didnt count this in . After all it is not approved. It is not done, that is true. Janet yellen will speak in the final press conference in just about 20 minutes. I expect this will be one of the questions. Jeff taylor were looking at highs of the session. So people seem to be taking this all in stride. I guess they knew this was coming. As we fast forward here. You have a lot of concerns about the real estate market. You have a lot of concern about salt. What does it mean for markets. Market only knows one way to go is up. Im looking at companies im focusing on looking at technology to take costs out of businesses right now to reach consumers that much quicker. Real estate market, hightech market that is the big thing focusing on right now. How theyre doing that. That is stuff were helping customers. Trish stay tuned, dont go anywhere, he have one. Nicole petallides is standing by with market reaction. What do traders tell you . One of the traders wrote to me, sarge is saying, steve guilfoyle, two of these show 4. 1 fed fund rate in 2020. Basically four hikes a year going forward. I mean this obviously is aggressive sounding. Big picture as we heard from the fed, we know we got every hike now. Those will continue into the new year. We heard about three hikes. We saw the stock market get a pop on this one. Right before the announcement we were up about 95 points. Right now were up 113. So didnt lose any ground. In fact gained ground. They like it ultimately. Interesting how you have two dissenters, you have to wonder what that is about . Why arent they all together . There are still people not true believers in normalizing rates. That is also front and center. Big picture things are looking better. Back to you. Trish it does, given they would like to not move rates higher at this moment, but im a little bit sympathetic with that, only because if youre anticipating 1. 9 Economic Growth in 2018, rob luna, why would you be raising rates . Yeah. I mean that is really interesting, trish. Like the other guests, i dont understand where this 1. 9 is coming from. I dont know how much they factored the new tax code into play there. And i think like i was saying earlier, it could be a bad case of cognitive dissew dense that they think the reason behind the stock market rally. Theyre embarking raising Interest Rates. They cant coincide how they will get over 2 gdp. Remember, President Trump last week was talking about four or five or 6 gdp i think theyre underestimating corporate america, theyre underestimating Small Business owners who really are good things here. Trish because they want to make sure they have the right track record. They dont like to be like the imf, that overestimates growth constantly and has to ratchet it down. I dont know. Why wouldnt they be more forthcoming what they really think unless this is really what they think . You know, to the point, historically theyre looking at. They havent been punished at this point, underestimating growth is better than overestimating growth. If youre calling for 3, 4 , gdp path of three Interest Rate hikes next year is probably not aggressive enough. This is now the thirdrate hike. If you look at 10 year treasury, not looking right now, but were lower than we started at beginning of the year. It hasnt been directly correlation to lowering Interest Rates. Why were seeing things like Mortgage Rates still very low. Trish i like the idea of unemployment dropping to 3. 9 as we start to see a little Wage Inflation there. That would be awfully nice. Theyre not really seeing any change in inflation. You have a theory, adam. I have a theory. Trish why they may be talking about such low growth. Call me craze i, but i think were all crazy focusing on washington and machinations behind the scenes. I think what is possible lowering their estimate of gdp so low going out to 2019, 2020, that gives incoming chairman, mr. Jerome powell a little bit of runway and ill tell you why. Because, trish if they say it will be really great. Everyone expects to be really great, you have a little hiccup, all of sudden he is under the gun the first year. Meanwhile if you steer expectations down a little bit and surprise to the upside. Trish theyre not supposed to do that . Hence my comment. Americans my comment. Why we all talk about the swamp and insiders game i think that is what is going on. Who is that talking . This is doug. This is doug. Trish go ahead. Desire to have Clear Strategy conveys to the markets what they believe will happen. What future path of policy is. I think that is it overthinking it. Reality, again and again they overestimated impact of Monetary Policy. I agree with your original diagnosis. It doesnt work that well. Now theyre normalizing. Take this at face value they dont believe the core productivity problem will be solved and that we will in fact just grind along, subpar 2 growth because productivity is flat. Difference between that forecast and takes into tax reform and Regulatory Reform and other things that could be quite beneficial is supply side improvement that gives you faster growth. Trish why, why, are you saying well keep going raising rates over and over again being despite fact no increase in productivity, no increase in gdp, despite no increase in inflation . One doesnt jell with the other, doug. They honestly dont believe they can affect it and they are probably right and they dont think other things will affect it and theyre probably wrong. Trish i agree with that. Their mission in the end, Financial Markets not overheating and dealing with another asset bubble. Trish all right. I think that they are understilting Economic Growth. Think a lot will happen when you see money that sitting overseas doing lots for other economies. Has a chance to come back here to do work for us. So that will be, that will be positive for growth. And lower taxes on the corporate side. It will be certainly positive for the stock market. We have a lot more to talk about here. This marriage between fiscal and Monetary Policy is really important and we have seen them at odds previously during the Obama Administration where the fed was doing everything it could and washington wasnt doing a darn thing. We may be getting into a situation where you have got the fed, well, trying to do everything it can on the side that would actually hinder growth because they dont want things to go out of control while washington is trying to move forward growth. So, i would just like to get everyone on the same page now and then. Fiscal and Monetary Policy together. Fed chair janet yellen is set to hold her News Conference in just about, well, about 15 minutes or so were going to watch her, her final News Conference as she turns things over to mr. Powell, we will have more on this fed announcement. Our big question is, why does she think the economy is going to be so anemic in 2018. Stay with us. Lots coming up. Trish were waiting on fed chair janet yellen. She is coming out any moment. Taking final questions as fed chief before she turns the reins over to jerome powell. Amid that news we heard of course that the fed is raising the benchmark rate by quarter point. Theyre estimating very low gdp growth, 1. 9 in 2018. Yet they say they will going to hike rates three times in the coming year. Adam johnson, jeff taylor, rob luna. Douglas holtzeakin back with me. We all have the same question, right, guys . I hope some Reporter Asks it of janet yellen. We want to know why theyre predicting such low growth in 2018 . Whether rob luna, they dont think the tax bill is not going through . Yeah or like i said theyre underestimating animal spirits out there. Once the baton is passed to the americans, corporate business owners, you know, what could happen . What type of stimulus we could get from that. The fact they think theyre done, theyre out of bullets, nothing else they can do with Monetary Policy in their eyes is enough to slow down the economy. I think personally, trish, quite the opposite. I think theyre significantly underestimating that. What that means for the equity markets is, probably another pretty good rally. Youre still looking at Interest Rates very low. Corporate tax rates coming down. The consumer is out there spending with unemployment dropping below 4 . This continues to be very good market for Equity Investors i believe. Trish adam johnson, you were predicting, credit where credit is due, this guy, everyone, predicted 24,000 on the stock market before yearend. He is even talking about 25,000. Yep. Trish if tax reform gets through before yearend. As soon as donald trump won this election you said everybody will have to reset and this is very, very good news for the markets. Yes. Anticipate regardless of what happens in d. C. , regardless of whether or not they get this tax plan through, that were still going to be able to support these levels . Actually trish that the fed is trying to move as well . I dont think you need to use the word regardless, i think they are getting it through. We heard what, 45 minutes ago before they were coming out here, they have an agreement coming out of congress. If there is blowup and for some reason that didnt happen, you could simply send the senate bill back to the house. The house would approve it. You can get a deal done. I think we get compromise deal which is even bert because rates go down for both top earners and corporations. Trish compromise deal is 37 , would be the top individual rate. Yep. Trish 21 for corporations. I want to remind everyone, were not just waiting on janet yellen. Were waiting on the president of the United States who will come tout to talk about the tax plan. As we await him, go to sound while ago him talking about that corporate rate. Were very, very close to historic legislative victory the likes of which rarely this country has seen. While the media focused on differences between the house and the senate bills i can only tell you that we have very, very talented representatives right here. I think i can say orin were very close. Very, very close. Well see where it end up. It is at 35 right now. If it got down to 21 i would certainly be, i would be thrilled. I would be thrilled. Trish some people may take issue because he did after all promise to not move, not budge beyond 20 . But 20, 21 is kind of all the same. As he points out, a big difference from the 35 that weve got now. However, however, douglas holtzeakin go back to you on this one. I think were running a risk of penalizing high wageearners, people working for companies for a living by effectively through salt making the tax situation more generous for them. They will pay more even if theyre at 37 . They will pay more, if they cant deduct state and local taxes while simultaneously giving 21 to corporations i just worry high earners are paying for the corporations. Are you concerned . No. I think if you look at the bill as a whole, it will be better than either the house and the senate, and the main reason to bring the rate down to 37 is follow the oldest rule in tax reform. If youre going to broad the base, purpose should be lower rates. Combination of trish im saying they didnt lower enough. Im not sure that is true. They lower prompter taxes up to 10,000. Lowered top rate. Trish producers usually keep this from me because i love to show this. Top 10 of all wage earners are paying for 70. 9 of all tax revenue in the United States of america. So, jeff taylor, seems to me if you give a tax cut, you ought to give it to people paying the taxes. Thats it. Right now looks like, whether tax bill is going to end up, it is only be 2 for top wage earners. I think going back to what you were talking about trish all right. Some cases theyre seeing increase. Theyre seeing increase because they cant deduct state and local. We talked about it plenty on the show. Intellectually everybody understands it. Spiritually i understand it. I dont like the idea of new yorkers being able to deduct that i dont like the chunk take out of Consumer Spending near term. If math works that way, reduce the Discretionary Spending how it affects overall economy. How it will affect Housing Market, different areas. That is tbd. Interest rate hikes in 2018, if we hit a bump in the road at some point, the fact you moved it up three times if were here next year you have a lever to bring it down quarter point if somehow that makes sense. You can stimulate the economy. That will be a significant move. Trish adam johnson, you foresee a situation, you know i run scared, you know i run scared, you know ive been concerned about the market various times. Adam known me a long time. I was very concerned back in the year 2000, 1999 and 1998 i was very concerned as far as back as 2005 going into the 2007 and 2008 crisis, i tend to worry about these things, perhaps before anybody is worried about them but in this particular case im looking at a market that feels pretty healthy. I know it is on fire but i dont feel that angst that i previously have felt during other times in my career. Good. Trish why is that. You dont feel angst because there is broad, solid economy underneath this market, despite what the fed told us about growth slowing look out to 2019, 2020, gosh that is a long way. There is solid reason for your optimism. That is what weve been talking about for months, two es, earnings and employment. Corporations making record amounts of money. Record amount of population working earning record inflation adjusted amount of income. That is powerful. Trish i will fight you on income thing. I think people need to make more in wages. That robert luna in agreement. Absolutely, trish. Trish go ahead, robert. Like you said, salt is a big issue. Im out here in southern california, trish, sees what a Million Dollars gets you in newport beach. It is not a lot. The taxes alone will cost you 13 to 14,000 a year. Forget our top state tax rate is 13. 7 right now. Not everybody will be benefiting from this. Trish you guys, youre california, so nobody cares, right . Miami, florida, were looking at point where like everything seems to cost a Million Dollars. We have benefit not having income tax. Is that going to make trish property tax side, i hail from new hampshire, the live free or die state. We have no income tax. No sales tax. Awfully nice. There are significant property taxes. So that means a lot of people will not be able to deduct as much in property taxes. I go back once again to the high earners. Who cares about high earners. You pointed out in california, a million bucks doesnt get you that far. A lot of these states, big salaries are not getting thaw far. Here is janet yellen. Lets hear what she has to say. Good afternoon. Today the federal open Market Committee decided to raise the target range for the federal funds rate by one quarter percentage point, bringing it to 1. 25 to 1. 5 . Our decision reflects our assessment that a gradual removal of Monetary Policy accommodation will sustain the strong labor market while fostering a return of inflation to 2 consistent with maximum employment and price stability objectives assigned to us by law. Before saying more about our decision ill review recent economic developments in the outlook. Following a slowdown in the First QuarterEconomic Growth stepped up to a solid 3. 25 pace in the second and third quarters of the year. Household spending has been expanding at a moderate rate. Business investment is picked up. Favable Economic Conditions favorable Economic Conditions abroad supported exports. Overall we continue to expect that the economy will continue to expand at a moderate pace. While changes in tax policy will likely provide some lift to Economic Activity in coming years, the magnitude and timing of the macroeconomic effects of any tax package remain uncertain smoothing through hurricanerelated fluctuation, job gains averaged 170,000 per month over the three months ending in november. Well above estimates of the pace necessary to absorb new entrants to the labor force. The Unemployment Rate has declined further in recent months, and at 4. 1 in november, was modestly below the median of fomc participants estimates of its longerrun normal level. Broader measures of labor market utilization have also continued to strengthen. Participants in the labor force has changed little on net over the past four years. Given the underlying downward trend in participation, stemming largely from the aging of the u. S. Population, a relatively steady Participation Rate is a further sign of improved conditions in the labor market. We expect that the job market will remain strong in the years ahead. You may have noticed that we altered the statement language about the labor market outlook. This change highlights the committee expects the labor market to remain strong, with sustained job creation, ample opportunities for workers, and rising wages. We anticipate further strengthening in labor Market Conditions in the months ahead. However, we expect the pace of job gains to moderate over time, as we gradually reduce the degree of Monetary Policy accommodation. Allowing the labor mark at the time to overheat, we raised the risk that Monetary Policy would need to tighten abruptly at a later stage, jeopardizing the economic expansion. Even with a firming of Economic Growth and stronger labor market, inflation is continued to run below the fomcs 2 longerrun objective. The 12month change in the price index for personal consumption expenditures was 1. 6 in october, up a bit from the summer but still below rates seen earlier in the year. Core inflation, which excludes the volatile food and Energy Categories has followed a similar pattern and was 1. 4 in october. We continue to believe that this years surprising softness in inflation primary reflects transitory developments that are larkly unrelated to the broader Economic Conditions. As a result, we still expect inflation will move up and stablize around 2 oaf the next couple of years. Nonetheless, as i have noted previously, our understanding of the forces driving inflation isnt perfect. As emphasized in our statement we will carefully monitor actual and expected inflation developments relative to our symmetric inflation goal and as i noted before were prepared to adjust Monetary Policy as needed to achieve our inflation and employment objectives over the medium term. Let me turn to the Economic Projections the Committee Participants submitted to this meeting. As always participants conditioned their projections on their own individual views of appropriate Monetary Policy which in turn depend upon each participants assessment of the many factors that shape the outlook. Median proprojects of grossed a justment product is 2 1 2 and not rates to 2 by 2020. A bit above estimated longer run rate. The median projection for the Unemployment Rate stands at 4. 1 in the Fourth Quarter of this year. And runs close to 4 over the next three years. Modestly below the median estimate of its longerrun normal rate. Finally median inflation projection is 1. 7 this year, 1. 9 next year, and 2 in 2019 and 2020. Compared with the projections in sent, real gdp growth is a bit stronger, Unemployment Rate is a bit lower and inflation is essentially unchanged. They identify changes in tax policy supporting this modestly stronger outlook although many noted that much uncertainty remains about the macroeconomic effects of the specific measures that ultimately may be implemented. Returning to Monetary Policy, for the past two years the fomc has been gradually increasing its target range for the federal funds rate as the economy has continued to make progress toward our goals of maximum employment and price stability. Our decision today continues this process. We still expect that the ongoing strength of the economy will warrant gradual increases in the federal funds rate. That expectation is based on our view that this rate remains somewhat below its neutral level. That is, the level that is neither expansionary or nor contractionary and keeps the economy operates on a even keel. Because the neutral rate currently appears to be quite low by historical standards, the federal funds rate would not have to rise much further to get to a neutral policy stance. But because we also expect the neutral level of the federal funds rate to rise somewhat over time, additional gradual rate hikes are likely to be appropriate over the next few years to sustain a strong labor market and stablize inflation around our 2 longer run objective. Even so, the committee continues to anticipate that the longerrun neutral level of the federal funds rate is likely to remain at low levels that prevailed in previous decade. This view is consistent with participants projections of appropriate Monetary Policy. The median projection for the federal funds rate is 2. 1 at the end of next year. 2. 7 at the end of 2019, and 3. 1 in 2020. Compared with the projections made in september, the median path for the federal funds rate is unchanged through 2019 and a touch higher in 2020. I should note that the Economic Outlook is highly uncertain, and participants will adjust their assessments of the appropriate path of the federal funds rate as their Economic Outlooks and views of the risks to the outlook change. Policy is not on a preset course additionally committees Balance Sheet program initiated in october is proceeding. As we noted previously changing the target range for the federal funds rate is our primary means of adjusting the stance of Monetary Policy and we do not foresee a need to alter our Balance Sheet normalization program. Americans our statement no longer mentions this program. Of course we would be prepared to resume reinvestments if a material deterioration in the Economic Outlook were to warrant a sizable reduction in the federal funds rate. Finally, i would like to note, although i have one more fomc meeting to attend in the new year, this will be my last scheduled News Conference. Over the next month 1 2 i will do my utmost to insure a smooth transition to my designated successor, jay powell. I am confident that he is as deeply committed as i have been to the Federal Reserves vital public mission. Thank you for being such an attentive audience these past four years, and as always i will be happy to take your questions. Marti, then harriet. Associated press. Madam chair, could you give us any insight into the discussion and how it dealt with the major tax changes that congress is considering now . There have been thoughts that with these changes happening at a time when the economy is already, with unemployment so low, that the fed may be forced to increase its pace on rate hikes, did any of that discussion come up in your meeting . So yes we did discuss tax policy and let me say that most of my colleagues factored in the prospects of fiscal stimulus along the lines what is being contemplated by congress into their projections. Now, i should emphasize that some of have been incorporating those expectations into their projections throughout the year. So changes to the projections that you see since september should not be viewed as an impact, an estimate of the impact of the tax package. In particular, broader expectations of changes to fiscal policy have been reflected in financial Market Conditions i think over the past year. For example, we have seen significant increase in the stock market. At least some portion i would judge likely partly reflected expected tax changes and, that effect along with other Financial Market effects which, affects, for example, projected Consumer Spending and would have affected wealth, that has been part of participants forecasts now for some time. I think my colleagues and i are in line with the general expectation among most economists that the type of tax changes that are likely to be enacted would tend to provide modest lift to gdp growth in the coming years. You see that in part. That is one of the reasons i think for the up tick you see in estimated growth and the decline in the Unemployment Rate. The views of participants i believe have been informed by a wide range of analysis, including that of the joint committee on taxation and other outside evaluators. My sense their estimates are essentially in the same ballpark, although they recognize, as i emphasize there is considerable uncertainty about the impacts, and that it will have to be monitored over time. More specifically they tend to see the packages boosting both Consumer Spending and Capital Spending to some extent. Now to the extent that the changes do have positive impact on the growth of potential gdp and longerrun growth, let me just say that this is something that should it occur would be very welcomed to participants as long as it is consistent with the attainment of our employment and inflation objectives. I guess i would also urge you to remember that when you look at the projections, that there are many factors that affect those projections and changes in tax policy. That is only one of a number of factors, including incoming data that has to some extent altered the out look of growth and inflation. All of that factors into the projections you see but i think bottom line, when you look at assessments of the funds rate path, participants continue to see gradual increases in the target rate for federal funds rate as being appropriate to sustain a strong labor market and bring inflation back to 2 . And, look, importantly, there is a lot of uncertainty about what the likely effect the will be and, my colleagues and i will be committed as always to evaluating incoming data and altering the outlook as appropriate. Harriet. [inaudible]. Dow jones newswires. You and others with the fed inflation are you confident that will be case particularly regarding wage gains . They have been pretty moderate in recent months yet the economy is growing and confidence is high . Is there something going on in the economy making it difficult for businesses to raise wages . So it is true that that incoming wage data only suggests modest pressure on incoming wages. That leads me along with the fact that inflation remains low, feeling that even though we have 4. 1 Unemployment Rate, that the labor market is not overheated at this point. Remember, the modest pace of wage gains also probably reflects slow productivity growth, but, when you ask me about the outlook for inflation, you know i talked in detail about this in the past and recognize there is uncertain about what is holding inflation down. But, my colleagues and i continue to believe that the factors that are responsible this year for holding inflation down are likely to prove transitory, that said, we all agree that our inflation objective is extremely important. We recognize that theres been a prolonged short fall. This is a symmetric 2 inflation objective and we continue to indicate that well be monitoring inflation developments closely and so, this is on the horizon, and recognized to be one of the risks facing policy. Thank you, wall street journal. Chair yellen i wanted to follow up on question about tax changes. When you, when you addressed it earlier today, when you spoke to Congress Last month you often describe, that you would welcome higher growth in the context of the employment and inflation mandate. I guess i wonder, how you judge the major provisions of the house and senate tax plans, corporate rate cut. Immediate expensing of big ticket purchases, new rates for passthroughs, rate cuts for individuals, do you see those on balance reducing balance capacity for u. S. Economy as opposed to increasing a rat gait demand . Ing a. I think my colleagues and i see likely tax package boostingg aggregate demand and boosting aggregate supply. Changes on Corporate Tax side. Reductions in the Corporate Tax rate, expensing, will lower the cost of capital and, while there are a range of estimates and uncertainty about how much stimulus that will provide to investment, in general i would see some stimulus to investment. In terms of aggregate supply effects, stronger pace of investment could boost Capital Formation and thereby, raise productivity growth and potential gdp or output to some extent. Exactly how long these effects might be remain uncertain but that is a channel and i suppose it is also possible, im uncertain how significant this would be, that lower marginal rates of tax rates, for those groups that will see them, could boost labor supply. And again there are a range of estimates in the literatures. I indicated i think, participants who have reviewed a number of pieces of analysis, includes the joint committee on taxation estimates and many outside analysts who have weighed in on this, an been influenced by that kind of analysis, but there is a good deal of uncertainty about what the impacts would be. To the extent that there are larger impacts than those analyses assume on aggregate supply or potential gdp, and in the context of an economy that has had disturbingly low productivity growth, that would be welcome, and could support faster gdp growth at least for some period without, you know, without creating a need to tighten Monetary Policy to offset that. So there are potentially both demand and supply effects here. So importantly, you really dont, at the end of the day, see very much change in the federal funds rate path. Participants do recognize that the Unemployment Rate is lower than their estimates of its longrun sustainable rate. So i think we are in the vicinity of full employment. [inaudible] much. Heather long from the washington post. You have mentioned that the committee thinks there would be wage increases next year. Im wondering if you could clarify if that is coming in part or mostly from the changes to the tax plan . Is that what the expectation is would drive the wage increases . I was also wondering i heard from so many female economists in academia and the fed, about what an inspiration you have been to them and how melancholy they will be to see you go. I wonder if you have any final word to young females or minorities looking to enter economics or banking profession and rise to your level. Remind me the first part of your question . Wages, the tax policy driving wage increase expectations . Well i think generally in a strong labor market where businesses are having trouble finding qualify workers we would expect in demand an supply, as labor market tightened weve seen some very gradual drift upward in wage gains. They remain at a low level. More complex ongoing strong labor market to see upward pressure. I believe that is the main thing that my colleagues are factoring in. On the question on advice to women and minorities, in the Federal Reserve, my colleagues and i are very focused on wanting to see and do what we can to foster greater participation of women and minorities in economics. We would love to, if we could, increase our hiring ourselves of women and minorities, and we see that both women and minorities are studying economics in disproportionately and disturbingly low numbers. Although the, women in stem feels generally fields generally are about even with men, represented about 50 in economics women majors constitute Something Like 30 of undergraduate majors. And there is disproportionate low enrollment of minorities. I will say from my own experience i think economics is a terrific field. I thoroughly enjoyed my career in economics and think there are many different paths that people can follow that lead to satisfying careers, and that there are very interesting and important questions that economics addresses and it is a great field and, would like to encourage greater involvement and think people will find that satisfying. In terms of the kind of research that done in the field, also great he diversity, more women and minorities may change the focus some extent the questions analysis they bring in and research and development would be helpful. Steve liesman, cnbc. Every day it seems we look at the stock market goes up triple digits in the dow jones. To what extent there is concern at Federal Reserve about current market valuations and do they or if they keep going on the trajectory should that animate Monetary Policy . Finally as a sign what is going on with valuations this cryptocurrency called by the coin keeps going up every day. What is the policy of the central bank of the United States of the introduction, use, incredible rise in popularity of bitcoin . Let me start, steve, with the stock market generally. Of course the stock market has gone up a great deal this year. We have in recent months characterized the general level of asset valuations as elevated. With that reflects is simply assessment that looking at price earnings ratios and comparable metrics, for other assets, other than equities, we see ratios that are, in the highend of historical ranges. So that is worth pointing out. But economists are not great at knowing what appropriate valuations are. We dont have a terrific record. And the fact that those valuations are high doesnt mean that they are necessarily overvalued. We are in a, i mentioned this in my Opening Statement and weve talked about this, repeatedly, likely a low Interest Rate environment, lower than weve had in past decades. If that turns out to be the case, thats a factor that supports higher valuations. Were enjoying solid Economic Growth with low inflation, and the risks and in the Global Economy look more balanced than they have in many years. So i think what we need to to and i think are adjustment in asset valuations the stock market what impact would that have on the economy and would it provoke Financial Stability concerns . And i think when we look at other indicators of Financial Stability risks, theres nothing flashing red there or possibly even orange. We have a much more resilient, stronger banking system, and were not seeing some worrisome buildup in leverage or credit growth that is at excessive levels. So this is something that the fomc pays attention to but if you ask me, is this a significant factor shaping Monetary Policy, now, well, it is a on the list of risks. It is not a major, it is not a major factor. Then you asked about bitcoin and there i would simply say that bitcoin at this time plays a very small role in the payment system. It is not a stable source of, store of value and it doesnt constitute legal tender. It is a highlyspeculative asset and the fed doesnt really play any role, any regulatory role with respect to bitcoin other than assuring that banking organizations that we do supervise tenanttive theyre appropriately managing any interactions they have with participants in that market, and appropriately monitoring antimoney Laundering Bank Secrecy act, you know, responsibilities that they have. Pardon did not me, has there been a directive about bitcoin to banks and their dealings with bill coin from the Federal Reserve . I dont think there has been anything specific about that. Generally, bank secrecy act, antimoney laundering responsibilities and this applies to bitcoin as it does in every other realm. Donna and then we go to sam. Donna borak at cnn. Respective tax bill question, in your view at all is the republican tax bill an illtimed fiscal stimulus . Are you concerned at all it will wind up squandering both tools the congress and fed have when it comes time to dealing with the recession . Look i will say it is up to the administration and congress to decide on appropriate fiscal policy and our job is to we continue to think you should see from the projections that a gradual path of rate increases remains appropriate, even with most almost all participants now, factoring in their assessments is the impact of the tax policy. It is projected that the tax cut package will lead to additions to the National Debt and boost by the end of the horizon the debt to gdp ratio and i will say and this is nothing new, its something ive been saying for a long time, i am personally concerned about the u. S. Debt situation. Its not that the debt to gdp ratio in the at the moment is extraordinarily or worrisomely high but its also not very low and its projected as the populn