The kidney will likely reduce the payment of assets the committee will likely reduce the payment of assets. However its not on a preset course. Forward guidance on Interest Rates, the threshold of 6. 5 unemployment is still the language. But there is something new here. Maintain its current target range, especially runnflation continues to below the committees percent longerterm goal. Is Economic Activity expanding at a moderate pace, labor Market Conditions have shown pervert further improvement. Household spending, Business Investment advancing, while recovery in the housing sector slowed somewhat in recent months. Fiscal policies, restraint over Economic Growth may be running below inflation. The longerterm Inflation Expectations have remained stable. Finally, the Committee Sees the risk to the allocation of the labor economy. Inflation persistently below its two percent objective could pose a problem for Economic Performance. The vote here was not unanimous. Eric rosengren, the boston fed president dissented, saying this move was premature given economic conditions. I should also point out there are additional releases coming out. There is a second statement describing the beginning of the tapering, the actual mechanics decisionith the fomc here. Again, summarizing basically what we heard in the statement itself. And there are Economic Projections being released at this hour on a quarterly basis. Those Economic Projections, no major changes noticeable in there. Let me highlight one in particular, the unemployment 6. 3 to 6. 6 is the projection for 2014. When will they start hiking Interest Rate . The fomc 17 members get a say at the table. 12 believe it will happen in 2015. Only to say it will happen in 2014. Three say 2016. Where will it be at the end of 2015 e 12 at the fund rate of 12 or lower. 14 have it at three percent or lower by the end of 2016. The message in this statement is that the taper has begun. Dont expect rates to be going up anytime soon. But the taper is officially underway. Peter cook with a great report from washington. You can see rise. On markets, it will be interesting to see where they go. Usually, it is the inflation , fisher or honig defending. What a change to see what i will call the liberal economist rosengren of boston dissenting. Is interesting, he decides that from his perspective the economy is not right there. Charlie evans apparently willing to go along with it. Esther george misses her chance to be only the fourth fed official to be dissenting. The big thing that catches your eye is, two things, one is the change in guidance. That they will keep the fed funds rate well past six percent. They have been saying that, and now they have formalized it. I think they had to do something with guidance. I think this might just be enough to placate markets, where front andds yields are back to where they were in june. We have sold off six basis points from where we are basically right now, earlier today when the option occurred. Equities do better. 11y were negative and now up on the dow. That is a nice move. Begin is a proxy for the global market. A weaker yen, a fractionally stronger dollar. Michael, i interested. Please. We dont have time to talk about this at length, but it is a very illiquid time of year in the bond market. Do you think that figured in . Was fully staffed today. One of the things about the bond it doesntthat matter for the 10 year if we taper today or in january or march. They might not have been expecting it, but it wasnt a huge surprise. There was a second thing you thought was important. But they did exactly what we were talking about just before the decision came apple so they changed their forecast. Stronger growth and lower unemployment the decision came out. So they change their forecast. They see stronger growth and lower unemployment. Forecast to their manage their deeds. Is washington going to love that this uncertainty is out of the way . Hear isnk what we will that there will be many ben bernanke critics on capitol hill applauding the fact that the wind down has at least started. I think you will hear as much from Ben Bernankes critics that finally this move has been made. And we saw from Eric Rosengren posta sent from eric , especiallydissent at a time when congress is not extending Unemployment Benefits again. I think those are the kinds of criticisms you will hear with regard to this. All as ben bernanke will to his final press conference. Federal open Market Committee decision is an important decision and an historic decision. 200613, ben bernanke chooses with his fed to taper. As hes his first speech returned from the Woodrow Wilson center in february, 2006. What a safe quotation, michael mckee, from a safe time. At that time, inflation was not even on the radar screen. Disinflation and reinflation was nowhere. They are concerned about , but not enough to sway him or the committee in the vote. They say, especially if project inflation is effective to run below the committees two percent longerterm goal. They did add an inflation component. Not as a lower bound on the inflation when they would hike, but they did note that they could change policy if they have this is what this deflation. In february, 2006, would you and your colleagues suggest that the fed had to provide almost closure to a burning kiera, and the way to do that was to begin . , and the bernanke era way to do was to begin . I think they said, look, we want to do this, but we do not want to do this in january when we might have another political fiscal issue he cut the debt effect goes back into february 7. And at the same time, the economy is good enough that if youre going to do it in january or march anyway, why not just get it started . To doally if youre going it slowly. This is about as small a taper as you could do. It is a small paper with a big market reaction. You can see a one percent move, the dow tobacco over 16,000. The dow back up over 16,000. We welcome all of you worldwide as we look at this fed decision and move forward to the News Conference that the chairman will give. We will see that in about 20 minutes. From our headquarters in new york, good afternoon. This is bloomberg surveillance coco stay with us. Bloomberg surveillance. Stay with us. Its good afternoon. A fed decision and a big decision and instore day. I richard see with us from credit suisse. Jeffrey rosenberg joins us now. Lets do a quick market move here to bring Jeffrey Rosenberg up to speed. Up dow launches over 16,000, more than that moment ago. The 10 year yield for the much unchanged. The equity the equities move, the bond market doesnt. The euro strengthens a little bit, up fractionally. Was at 16, little bit of the fix was at 16, a little bit of latency. Yen, 103ee the dollar. 45. Jeff rosenberg, why do i see the bond market not moving and the Dow Jones Industrial average moving . It is a little bit more expected out of bond market participants. You look at all of the surveys and where folks had their expectations. The bond market was about evenly split between dissembler december taper and january taper. A lot of the expectation was priced in, in the moves in Interest Rates leading up to todays action. It is a little less of a surprise from the fixed income market side. Half of us were thinking they may have waited until january. But the debate was either urged december or january. Either december or january. Just keep doing these pretend tapers along the way . Or do they rams them up over time . Ramp them up over time . Today they started with about 5 billion each on mortgages and treasuries. That was a second part of the debate, would you get a very and 5 billion is on the smallish side. A lot of the debate will be whether they ramp it up. What is clear is the expectation and the fed is going to reiterate this it is all conditional on the path of the economy. The environment we have been in for the past four to six weeks, Economic Data has consistently surprised to the upside. If you have that kind of consistent performance along the lines of what they are forecasting in terms of 2. 8 up to 3. 2 type of Economic Activity. The will be out of qb by end of 2015 as long as the at on of out of qb by the end 2015 as long as the economy stays on this path. Tomichael mckee, i want you frame the right question to ira jersey about the makeup of this taper. Most of it is a five letter word that sounds like a four letter word, because we are arent out by it. I suspect the one thing they did was by starting small, they took the pressure off of januarys meeting, which is Janet Yellens first meeting possibly as chair. They may not have to go and do anything into the meeting in march. They will continue to buy mbs and newly issued agency mbs. Which is what they have been doing, and they will not change the way they are buying treasuries. No real impact. Not in the bond market. It is a little time of incremental supply over the next six weeks that will come into both of those markets. In the case of the mortgage market, the fed was buying more than 100 of supply. It might actually ease some of the pressures that have appeared in liquidity in that market. But they are still buying a lot of bonds. In 2014, they will still be buying hundreds of billions of dollars worth of mortgages and treasuries. Rosenberg,ly, jeff is that a distortion to the market . Will we still be distorted in our Financial Markets well into 2014 . There is still a tremendous amount of support and a tremendous amount of distortion by the fed. What is key today is a very important day in that perhaps and i dont want to overestimate this. But we might begin to see the possibility where the fed is signaling its confidence in the economy and that confident in the economy is helping to boost Financial Confidence and therefore Financial Assets. So far, has been the failure of Financial Assets in the economy and they have needed the distortion of quantitative easing to hold up asset prices. Today, a little bit of a reverse of that. It is too early to see if that is the trend for 2014, but certainly a major change in the feds actions and the Financial Market performance. Michael mckee, what would you ask the chair at the prep the press conference . I would ask what they anticipate. Do they think the economy is going to get better significantly faster than they had anticipated and get out of qb more quickly qe more quickly . Or do they think its going to stretch out . We will continue the reaction to todays historic decision. The fed tapers. Good afternoon. The fed decision, a special edition of bloomberg surveillance. With me are Jeffrey Rosenberg and ira jersey. Will looki look at. This is a dummy chart for me. Ira jersey and Jeffrey Rosenberg are looking at this dot chart. What is this . It is where the members of the fomc believe that the fed funds rate will be in those years. But this is their crystal ball. Exactly. This is where they see the fed funds rate going, or were they would like to see it. The median went from two percent to 1. 75 . Have already seen short and markets moving. This is the whole idea of Forward Guidance. They are not seeing inflation. We do not need to move the rate as high as you might. Jeffrey rosenberg, this sounds like a bad science project. It sounds like a Group Project in organic chemistry or nobody really wants to participate. Is this effective policy . Really know. This is also about moving into the next phase of policy. We are moving from purchases to promises. And the promises of Forward Guidance are great, in theory. In reality, it may be a lot more challenging for the fed to be successful on that. That is what the story of 2014 will be all about. Does the fed have credibility . It is easy to have credibility when the economy isnt doing great and inflation is falling. It will be a much more challenging environment if the economy is signaled what its doing recently and inflation finally starts to find some footing on the upper side. Those friend and yield curves maybe a little bit more volatile than the fed hopes they will be. What is the presumption, Jeffrey Rosenberg, of future inflation . What is the likelihood that viewers were world wide that viewers worldwide will see . Nflation next year this is not an inflationary problem. First and foremost, people have too much fear of inflation. The problem is that we have not had enough inflation. However, the u. S. Might see the bottoming of inflation figures, and in the beginning to rise. We will call it one percent to maybe one. 5 . To maybe 1. 5 . That trend may undermine the Forward Guidance of objective of the fed to keep the Interest Rates on the short end of the curve. You talk about the credibility of guidance. Im wondering if janet yellen will get a pass in the beginning, in that people will assume that she is credible, at least in the beginning of her term until such time she is proven wrong in whatever policy amendments might occur. I note therence will be changes to the fed, but ultimately the vice chair will move to the chairperson ship. The people at the head of the table will only move modestly. Haveknow you know this, we a pretty good example of that in the form of mark carney. Much of a get honeymoon over there at the bank of england. When the data really challenges the underlying forecast of the fed and that rates of change begin to challenge that, the market may not be as variable as the fed hopes it will be. Up 161 points right now. Michael mckee, you are so good at analyzing the forecast. What should i look at . In employment forecast, the inflation forecast, gdp forecast, the forecast for your Denver Broncos . Which matters . It depends on who you talk to. I think the broncos. No, but it is the policy they are basing this on. We will watch in march to see as they come out with another forecast and how the Unemployment Rate has moved in the in between time. Jeffrey rosenberg, thank you so much. Mr. Jersey will continue with us. The decision will be in hand. I feel like its a groggy moment. The ecb comes out with their statement, but then the fireworks start at 8 30 a. M. Out of frankfurt germany. Here at 2 30 p. M. Eastern time, the chairman will speak. Cook and others are in that room and will have sharp russians for chairman bernanke. Sharp questions for chairman bernanke. All eyes worldwide in the Financial System on washington. The Federal Reserve open, the eccles building, and the chairman coming into the press celebrating his 60th birthday. Here is ben bernanke, perhaps his final press conference, the 14th chairman of the Federal Reserve system. Good afternoon. The federal open Market Committee concluded a twoday meeting earlier today. From ourready know statement, the committee decided starting next month to modestly reduce the pace at which it is increasing the size of the Federal Reserves belichick. But midi also clarified guidance on Interest Rates, emphasizing the current range for the federal interestrate target likely will remain appropriate well past the time that the rate declines below 6. 5 , especially projected inflation continues to run below the committees two percent longer run goal. Todays policy actions reflect the assessment that the economy is continuing to make progress and that it also has farther to travel before conditions can be judged normal. Despite significant headwinds, the economy has been expanding at a moderate pace and we expect growth to pick up somewhat inane coming quarters in coming fiscals, modified by drag. The jobless rate has continued to improve. At the same time, the recovery is far from complete with him with unemployment still elevated and unemployment and longterm underemployment still major concerns. We have also seen declines in labor force participation, which reflects not only the aging of the population, but also disgorgement on the part of potential workers. Inflation has been running below the committees longrun objective of two percent. The committee recognizes that inflation persistently below its objective could pose risk to Economic Performance and is monitoring developments carefully for evidence that inflation will move back to its objective over time. This outlook is broadly consistent with individual rejections submitted in conjunction with this meeting by the 17 fomc purchase offense, five Board Members and 12 bank president. s always, each participant projections are based on their initial point of view. As well as policy. Their estimates of increases in gdp have a tendency of 2. 2 of to two 2. 3 in 2013. A rising next year with similar growth estimate in 2015 and 2016. Purchase up and cbn employment rate, which was seven percent in november, as continuing to decline. Projections have the and implement rate falling between three percent and six percent in the Fourth Quarter of 2014, and then between 5. 3 and 5. 8 by the final quarter of 20 2016. Back tooving gradually two percent as the economy expands. Inflation projection for 2013 is 0. 90. 1 . Let me now return to our decision to reduce the pace of asset purchases. Asset purchasehe program in september, 2012, we said we would continue purchases until the outlet outlook for the labor market had improved substantially. Then, we have seen meaningful progress in labor market. For example, since we began the current purchase program, the economy has added about two. 9 million jobs in the and implement rate. When we started the program, many forecasters all the unemployed rate remaining near eight percent throughout 2014. These Economic Indicators have increased our confidence that the job market gains will continue. For example, nonfarm payrolls have it recently been increasing at a pace of about 200,000 jobs per month and he and implement rate has fallen by about 6 10 0. 6 since june. We expect Economic Growth to be Strong Enough to support further job gains. Further, fomc participants now see their risks around growth and unemployment has having become more nearly balanced rather than tilted in an unfavorable direction at the inception of as things were at the inception of the asset purchase program. We have been purchasing 85 billion per month in longterm treasury and Mortgage Backed securities. Starting in january, we will be purchasing 75 billion in securities per month, reducing purchases of treasuries and Mortgage Backed securities by five billion dollars each. It is important to note that even after this reduction, we will still be expanding our holdings of longerterm securities at a rapid pace. We will also continue to roll and maturing securities reinvest principal payments from the Federal Reserve holdings of agency debt and agency Mortgage Backed securities into words into agency Mortgage Backed securities. Our sizable and still increasing holdings will still put downward pressure on longerterm Interest Rates, support mortgage market, and make financial conditions moore, native, which in turn should promote further progress and backbor market toward the objective of two percent. Our modest reduction in late with thechases incoming data broadly supporting the outlook, we will likely reduce the securities purchases and furthered measured steps at future meetings. Progress is by no means certain. Consequently, future adjustments to the pace of asset purchases will be deliberate and dependent upon incoming information. Asset purchases remain a useful tool we are prepared to deploy as needed to meet our objectives. With unemployment still well above the normal rate, which Committee Participants estimate to be between 5. 2 and 5. 8 , and with inflation continuing to run between below the two percent longerterm objective, accommodative policy remains appropriate. The fomc today also enhanced its Forward Guidance today. For the past year, the committee has said the current low target range for the federal funds rate will be appropriate at least as long as the Unemployment Rate remains above 6. 5 . Inflation is projected to be no more than half 0. 5 above the two percent longerterm goal and longerterm expectations are well anchored. We emphasize these are thresholds, not triggers. Crossing a threshold would not lead automatically to an increase in the federal funds it isbut only that appropriate for the committee to consider whether the broader Economic Outlook justified such an increase. With many fomc participants now projecting that the 6. 5 unemployment threshold will be reached by the end of 2014, the committee decided to provide Additional Information about how it expects its policies to evolve after the threshold has been crossed. Based on the assessment of Current Conditions in the outlook, which is informed by a range of indicators, including labor Market Conditions, financial conditions, and inflation pressures, the committee now anticipates it will likely be appropriate to maintain the current federal funds rate target well past the time that the and implement rate declined to below 6. 5 . Especially if projected inflation continues to run below its two percent goal. In part, this expectation reflects our assessment based on a set of indicators that there will still be a substantial amount of slack in the labor market when the Unemployment Rate also to 6. 5 . 6. 5 . Ls to as the last phrase of the enhanced guidance underscores, the prospects for inflation provide another reason to keep all of the accommodative. The committee is determined to avoid inflation that is too low as well as inflation that is too high. Keeping ratesates low am till at least its easy inflation clearly moving back to its objective. Our Forward Guidance is reflected in the latest projections for the federal funds rate. Although the tendency to project the federal funds rate for the Fourth Quarter of next year encompasses six point five percent, 15 of 17 fomc participants do not expect a rate increase of in 2014. Most see the target rates rising only modestly in 2014 and three do not see any increase until 2015. For all participants, the projections for the federal funds rate is 75 basis points by the end of 2015 and 1. 75 by the end of 2016. In summary, reflecting acumen of progress in a cumulative progress in the job market, it is adding longerterm securities to its Balance Sheet. If incoming information supports the committees further objectives, the committee is likely to reduce the pace of monthly purchases in furthered measured steps in future meetings. However, the process will be delivered and data dependent. There is no set course. The fomc also provided future guidance on Interest Rate, stating that it asked to maintain the federal funds target at the current range well past the time that the and implement rate falls below 6. 5 . Especially if projected inflation continues to run below two percent. The Federal Reserves enhanced guidance about its policy intentions and substantial increased holdings of securities will remain accommodative consistent with the pursuit of the mandated objectives of maximum employment and price stability. I will be happy to take your questions. Thank you. Sex today was the first reduction in asset purchases and you said future reductions will be in measured steps, but not on a determined course. Would you tell us about the frame work that you used to determine the size and timing of those reductions . And previously, you had said that you want the program to end altogether by the middle of next year. Is that still a likely scenario . Said, the steps we take will be data dependent. If we are making progress in terms of inflation and continued job gains, which i imagine will continue to do probably then i imagine we look continue to do at each meeting. That would take us late in the year, if not by the middle of next year. If the economy slows or we are disappointed in the outcomes, we could skip a meeting or two. On the other side, if things pick up, then we could go a bit faster. My expectation is for similar moderate steps Going Forward throughout most of 2014. When you say similar moderate steps Going Forward, is 10 billion in increment that people should anticipate . Is equal amounts of Mortgage Backed securities and treasuries also what one should anticipate . Finally, when you say well past the implement rate of 6. 5 why not pick a number . Why say well past . On the first issue of 10 billion, again, we will say we say we will take further modest steps. That would be the general range. We will be data dependent. We could stop purchases if the economy disappoints. We could pick them up somewhat if the economy is stronger. In terms of mbs versus treasuries, we discussed that issue. Thegeneral sense of committee is that equal reductions, or approximately equal reductions is a similar way to do this. It obviously does not make a great deal of difference in the end to how much we hold. That was going to be our strategy. On the issue of a number number the Unemployment Rate lets talk first about the labor Market Conditions. The Unemployment Rate is a good indicator of the labor market. It is probably the best single indicator we have. We were comfortable setting a 6. 5 Unemployment Rate as the point at which we would begin to look at a more broad set of labor market indicators. However among precisely because we dont want to look just at the Unemployment Rate once we get to the six. 5 , we want to look at hiring, quits, vacancy, or dissipation, longtm, etc. , wages we could not put it in terms of another Unemployment Rate level. I expect there will be some time 6. 5 whereyond the the other variables we are looking at will line up and give us confidence that the labor market is Strong Enough to stand the beginning of increases of rates. The sep, the Economic Projections that were distributed, obviously, this is individual assessments and the committees collective view. But nevertheless, gives you a sense of the current expectations about the length of time. The sep shows that 6. 5 is expected by a large number of people to be reached at the end of next year, 2014. And in the first rate increase is in courting to the socalled place in 2015. Ng that is the order of magnitude order ofle are the magnitude to occur that people are exciting. But we must be persuaded that the labor market is sufficiently strong in order to begin to withdraw accommodation. Mr. Chairman, as you well know, the fed is going through transition next month. Can you talk about the role that janet yellen played in formulating the policy that is being laid out today, and what kind of consistency the public can expect going into her tenure, assuming she is confirmed will the program continue as you laid out under her leadership . Yes, it will. I have always consulted closely with jen it even before she was named by the president. And i consulted closely with her decisions as well and she fully supports what we did today. Mr. Chairman, your inflation twocasts never get back to percent in the time horizon that you cover, out 2016. Given that, why should we believe the fed has asymmetric inflation target . And in particular, why should we you a why should we believe you are following an optimal policy of control as you have implied in the past and given an above inflation target . These are estimates. There are many things implicit in them. We believe things will gradually move back toward two percent. And we allow in our guidance that it could go back as high as 2. 5 . Even though inflation has been quite low in 2013, let me give you the case why it might rise. First, there are special factors, such as Health Care Costs and other things that have been unusually low that might be reversed. Secondly, if you look at the fundamentals for inflation, including Inflation Expectations about whether by financial surveys, and if you look at growth, which we expect to be anticipating which we expect to be picking up. If you look at wages, which have been picking up two percent or higher. All of these things suggest inflation will gradually pick up. What i try to emphasize in my opening marks, and is clear in our statement, is that we take things very seriously. Picked upcannot be and moved where you want it. It requires some luck and some good policy. We are very committed to making sure inflation does not stay too low. We are continuing to monitor that very carefully and take whatever action is necessary to achieve that. But even under optimal control what about under optimal control . Even under optimal control he can take quite a while. The inertia can take quite a while to move. And the response to increasing Economic Activity is quite low. Particularly given an environment where we have Falling Oil Prices and other factors that are contributing downward forces on inflation, its difficult to get inflation to move quickly to target. But we are committed to doing what is necessary to get inflation back to target over the next couple of years. There has been a great deal of discussion in your profession about the potency of policy at the zero boundary. To bounce off robin, it is striking that inflation has fallen while qe has been in place and the economy continues to under shoot the fomcs forecast. I guess the simple question is, are you giving up . You reached the limit of your policy tools and there is nothing more you can do . The economy is still running way below the trendline that existed before the financial crisis. Everything depends on what benchmark you compare it to, as you know. I said last year that Monetary Policy was not a panacea. It could not solve all our problems. And in particular, it cannot do anything about it about a slowing and digital growth among which appears to have happened to some extent. They cannot do anything about fiscal policy, which is working in the opposite direction. Things, perhaps the outcomes are not as bad as you might think. As ive mentioned many times, the Congressional Budget Office assessed the fiscal dragon 2013 as being about 1. 5 Percentage Points of growth the fiscal drag in 2013 as being about 1. 5 percentage point of growth. When you look at those together, it says that the Monetary Policy appears to have succeeded in deal of thatgood fiscal drag, which we were not at all sure we could accomplish. We are not giving up. We intend to maintain a highly accommodative policy. Nothing we did today was intended to reduce the accommodation. We will still be buying assets at a higher rate and increasing our Balance Sheet and holding onto those assets. In our guidance today, we strengthen our guidance to make clear we expect to keep rates low well beyond the animal of 6. 5 . The Unemployment Rate of 6. 5 . Was it a close call in the discussion today among participants and members, given all you have said about the outlook and or forecast . And your forecast . Was there a lot of debate about tapering now, or to wait longer and wait for more data . Certainly, it was a very important decision and we debated quite extensively. That being said, the question we asked ourselves was whether we felt comfortable to say that we had met, or at least on the way to meeting the criterion we set for the program i2012, and that was a substantial improvement in the labor market. If you look at cumulative improvement, and i mentioned some figures in my opening remarks, and if you look at recent numbers on unemployment, employment, and also in terms of growth, we are seeing encouraging numbers in terms of household spending, auto purchases. Fiscal drag has reduced stronghold that stronger numbers internationally. I dont want to overstate the case. For aojections are only small pickup in growth going into next year. But there was a pretty widespread view that there was a reasonable expectation, first, that the recent gains in the labor market would continue, and her member we are just beginning this process now. By the time we complete this process, it is very likely that ofwill past the hurdle substantial improvement in the outlook for the labor market. Have true that while we on thegnificant progress labor market and growth hurdles come a there is still a serious question about inflation, which is a bit more than just a concern, as we said in our statement. Will go back to two percent and i give you reasons why we think that will happen. We take that very seriously. Inflation does not show if inflation does not show signs of returning to target, we will take appropriate action. Mr. Chairman, now that you have introduced tapering into the system, if the economy were to stumble again in the future, would you recommend or have you discussed with your colleagues increasing bond buying in the future . Have you considered any alternative measures, for example, more direct stimulus into the economy if it were to stumble again . What kind of direct stimulus you have in mind . Any type of stimulus that you would be not buying it back from the bank, essentially. Of the Legal Authority that the Federal Reserve has, we dont have that you could ask for. That we could ask for. We are getting now into a fanciful discussion, i think. Assetsic tools are purchases, and we are allowed only to buy treasuries and agencies securities. We are not allowed to buy or brits in the same way that many corporate in the same way many Central Banks are. We can manage our Forward Guidance, and that has been helpful and effective. We will try to do more with that, but there are limits to that as well. Be on a certain point, markets certain beyond a point, markets may not view as a certain thing as being credible. Thing thed of only thing that i can think amounts to a direct infusion into the economy, if you will, is action similar to the british funding for Lending Program where they provided cheap lending to banks if the banks could show they had increased their lending to households or small businesses. We could, in principle, do Something Like that, and we have looked at that because we do have a discount window where we lend to banks. However somewhat differently from what was going on in the u. K. And in europe, here, our banks are flush with liquidity and cash on hand. They owe lots of reserves, of course. Defense was there would not be any take up on that kind of the sense was there would not be any take up on that kind of action. In any case, i dont think right now that tight credit in most areas is the major problem. What we have in many cases is that firms are either not looking for credit, or their Balance Sheet are not strong pass credit worthy screens at the bank. We do have a range of things we can do. But we are already being pretty aggressive. [no audio] under some circumstances, yes. A narrow question and a related broader question. The narrow question is, did the changeover in leadership payroll on when to taper . Play any role on when to taper . The related broader question is for my you are an historian of Monetary Policy. What do you think future historians of Monetary Policy will have to say about you in the future . The answer to the first question is, no. The answer to the second question is, i will be interested to see. I hope i live long enough to read the textbooks. Changesve been two big at least, more than two, but to that i would cite two that i would cite as a result of the crisis. The first is that the Federal Reserve has rediscovered its roots in the sense that the fed was created to stabilize the Financial System in times of panic. We did that. And we used tools that were analogous in spirit to what the Central Banks have done for many hundreds of years, but of adapted to a modern Financial System. The other thing that was made not completely unique, but largely unique about this timeframe is that we were trying to help the economy recover from a deeper recession at a time when our Interest Rates for almost essentially zero. That required other methods, most prominently Forward Guidance and asset purchases. Neither of which is entirely new unless you put aside the depression where Monetary Policy was on the whole , this is one of the first examples of aggressive Monetary Policy taking place in a near interest near zero Interest Rate environment. Now we are seeing japan and the u. K. And other countries taking similar approaches. That will be an area where will be historians interested in exploring them as well as monetary theorists and in him. Studies. Ericial studies. On the one hand, you are giving the economy something by signaling that you may keep Interest Rates lower for longer than previously thought. But on the other hand, youre taking something away by reducing the largescale asset for justice. Thisu think that overall, is maintaining the level of monetary accommodation steadily, is that a sign that the decision to reduce asset purchases is anatively less about improved outlook for the economy and, perhaps more out of concern that the asset purchases are less effective or might be fueling bubbles . As i said before, asset urges purchases are a supplementary tool. Our main tool is interestrate policy. The reason they are a supplementary tool is because it is a much less familiar tool. We have less ability to calibrate how big the effects are, for example. And it is also true that as the Balance Sheet of the Federal Reserve gets large, managing that Balance Sheet, exiting from become more sheet difficult. There are concerns about effects on asset prices. Although i would have to say that is another thing that future monetary economists will want to being looking at be looking at very carefully. Our view in september, 2012 was that we had interestrate already low and they were expected to stay low for a good long time. The economy, though, was faltering. We needed an additional boost. We needed an additional boost. We brought in the asset purchase from graham. We put a specific objective, a substantial improvement in the outlook for the labor market. Our sense was once said intermediate objective was attained, once the economy had grown and was moving forward, at that point we could wind down the secondary tool, the supplementary tool, and achieve, essentially, the same amount of accommodation using Interest Rate and Forward Guidance. I do want to reiterate that this is not intended