And the prospects for our economy. The Federal Reserve and is one of the most important institutions in the country and if it deed the world. Served as vice chair, then as chair of the Federal Reserve board. Her distinguished service covered the most tumull chews period since the great depression. Many books have already been written about this period and certainly many more will be written from different points of view and differing assessments. The Financial System and the economy have stabilized. We are no longer debating how to reconstitute them. But rather how they might work even better. This hearing will review the Development Since the crisis and especially since dr. Yellen became it fed due to maximum employment and price stability. By the Standard Measure of unemployment which is 4. 1 at last reading and by the Standard Measure of inflation which most recently stood at 1. 6 . Both the first and second goals have been achieved. Although the standard of metrics are very good, all is not well in our economy. Economic growth has been slow to the point that some economists have devised we try to lower our expectation for future growth by about 1 3 from the average post war growth rate. Wage growth has been surprisingly low as has been Business Investment. Labor force participation has remained low and various levels of dine mmp are way down from previous before the previous recession. Various explanations have been offered including an aging population and decreased International Competitiveness of u. S. Businesses impaired by taxes and regulation. But men money and banking also seem to have a role. Rather than issuing more loans or holding extraordinary large amounts of reserves at the fed and the fed has invested trillions in mortgagebacked securities and treasuries. So we have a condition of which businesses are if investing less, workers are on the sidelines and bankers are lending less than they could. In short it economy is not realizing its full potential. The joint Economic Committee has dedicated several hearings and interested to hear chair yellens views. Theyre major reason for the businesses to hire more workers in the United States which is why it current effort in congress to reform the tax system is so very important. Both it house and the Senate Versions of tax reform make critical improvements in particular, reducing the Corporate Tax rate to bring it more in line with those of other countries that we compete with. Were very interested to know how the fed perceived such tax rate alignment and whether its policy making will assume that increases the economys productive potential. In closing, let me express my deepest appreciation for chair yellens service to the nation in one of the most consequential services for the economy and welfare. I will now yield to the Ranking Member for his statement. Thank you, chairman. And chair yellen, i want to begin by thanking you for your extraordinary leadership. Your leadership has played a key role in 4e7ing the economy recover from the financial crisis. The nation owes you a debt of gratitude for your careful stewardship of Monetary Policy. Last year i asked you about how we can get the economy delivering for more americans. Unfofrp if theory the Economic Situation has probably is probably even more polarized today. Economic growth, jobs, start ups all are if creasingly concentrated by zip code and while weve made real progress, some parts of the country are being left behind. Too many areas are struggling to get back to where they were a decade ago before the recession. I represent a state with an Unemployment Rate well above where it was back when the recession began and that doesnt seem to me like weve fully recovered from this recession. I know that the federal open Market Committee has not yet made a decision on an Interest Rate hike next month. But the fed is expected to raise Interest Rates, which would pee the third rate hike this year, with many communities across new mexico and the country struggling, im concerned we may be putting the brakes on too soon. Wage growth remains weak while health care, college and child care are less affordable for working families and this reality should inform both monetary and fiscal policy. We need targeted fiscal actions to grow the economy and to help these areas that been left behind but thats not what some of my colleagues are proposing. The republican tax bill in the senate adds 13 million to ranks of the unif hnsured. To hand out tax brakes to the wealthiest among us, republicans are not only taking Health Insurance away, but they are wasting an opportunity to invest in our people and our communities. Theres a lot that we could be doing instead. Congress should be focusing on important goals such as growing the economy and driving up wages for working families. For the cost of the current tax for posals we would literally provide all children with Early Learning activities. Plus offer free tuition at public universities. Insure broad brand access to every american, rebuild our infrastructure and take bold action to fight the Opioid Epidemic but were not going to be able to make those kinds of investments if they insist on adding to tax breaks to the wealthy. As you conclude your term, its important to share how an as in the last congress is considering several republican proposals to limit the feds ability to independently conduct Monetary Policy. These bills seek to change the way the fed carries out Monetary Policy, even going so far as to require the central bank to swap its securities for treasury bills. There are also proposals to limit the sern Central Banks flexibility. This idea is especially hard to understand from my point of view in light of the Critical Role that the fed played in responding to the financial crisis and preventing another great depression. Im concerned about these attempts to undermine the Federal Reserves independence and i suspect you may be as well. Id like to close with a point about the challenges in todays political environment. Fiscal and monetary policies work best when theyre aligned. But its difficult to know with any certainty where republicans in congress are ultimately heading with fiscal policy. For years they have pledged to reduce the deficit but their tax package explodes the deficit. The disconnect is also visible on infrastructure. President trump has talked about the need to invest in infrastructure. But as we wait for a Real Infrastructure proposal, republicans are proposing to eliminate key infrastructure funding sources. They said they would deliver middle class tax cuts. But in 2027, nearly 24 million americans earning less than 1 n 100,000 a year would face a tax increase. And in the senate bill, half of all households would see a tax increase when it is fully implemented. The kazm between words and policy must make the already challenging job of conducking Monetary Policy that much more difficult. Again thank you to your service for our country and i look forward to hearing your testimony today. Rather than give the republican response, im going to introduce the chair. It is with great pleasure for me to introduce dr. Janet yellen, chair of the board of governors of the Federal Reserve system. She has long experience including four years that vice chair of the board and chief executive officer of the Federal Reserve bank of San Francisco and previously served as the chair under president clinton and as chair of the Economic Policy committee for Economic Cooperation and development. Shes also professor amaritous at the university of california at berkeley. She earned her ph. D. In economics from yale, an honorary doctorate from brown, an honorary doctorate from the arcollege. You are recognized. Thank you. Ranking member hinrich and members of the committee, i appreciate the opportunity to testify before you today. I will discuss the current Economic Outlook and Monetary Policy. The u. S. Economy has strengthened further this year. Smoothing through the volatility caused by it recent hurricanes. Job gains average about 170 thousand per month from january through october. A somewhat slower pace than last year but above the range we estimate will be consistent with absorbing new entrance to the labor force in coming years. With the job gains this year, 17 million more americans are employed now than eight years ago. Meanwhile, the Unemployment Rate, which stood at 4. 1 in october has fallen 6 10th Percentage Points since it turn of the year and is nearly 6 points below its peek in 2010. In additioni the Labor Force Participation rate has changed a little in recent years, which is another indication of improving conditions of the labor market, given the downward pressure on the Participation Rate associated with an aging population. However, despite these labor market gains, wage growth has remained relatively modest. Unemployment rates for African Americans and hispanics which tend to be more sensitive to Overall Economic conditions than those for whites have moved down on net over the past year and are now near levels last seen before the recession. That said it remains the case that Unemployment Rates for these minority groups are noticeably higher than for the nation overall. Meanwhile, Economic Growth appears to have stepped up from its subdued pace early in the year. After having risen at an annual rate of just 1 4 in the First Quarter, u. S. Inflation agisted Gross Domestic Product is currently estimated to have increased at a 3 pace in both the second and Third Quarters. Desite the disruptions to Economic Activity in the Third Quarter caused by recent hurricanes. Moreover the economic expansion is increasingly broad based. Across sectors as well as across much of the global economy. I expect that with gradual adjustments in the stamps of Monetary Policy, the economy will continue to expand and the job market will strengthen somewhat further. Supporting faster growth in wages and incomes. Although asset valuations are high by historical standards, overall vulnerabilities in the Financial Sector appear moderate as the Banking System is well capitalized and broad measures remain contained. Even with the step up in growth of Economic Activity and it stronger labor market, inflation is continued to run below it 2 rate that federal open Market Committee judges most consistent with our congressional mandite foster both maximum employment and price stability. Increases in gasoline prices in the aftermath of the hurricanes temporarily pushed up measures of overall Consumer Price inflation but inflation for items other than food and energy has remained surprisingly subdued. The total price index for personal consumption expenditures increased 1. 6 over the 12months ending in september. While the core price index which excludes energy in food prices rose just 1. 3 over the same period. About half a persejt point slower than a year earlier. In my view it recent views might reflect transitory factors. As these transitory factors fade, i anticipate inflation will stabilize around 2 over the median term. However t is also possible this years low inflation could reflect something more persistent. Indeed 23flation has been below it 2 objective for most of the past five years. Against this back drop the fomc has indicated that it if tends to carefully monitor actual and expected progress towards our inflashz goal. Although the economy and the jobs market are generally quite strong, real gdp growth has been disappointingly stloe during this expansion relative to earlier decades. One key reason for this slow down has been the retirement of the older members of the baby boom generation enhance the Slower Growth of the labor force. Another key reason has been the unusually sluggish pace of productivity growth in recent years. To generate a sustained boost in Economic Growth without causing inflation that is too high, we will need to address those underlying causes. In this regard the Congress Might consider policies that encourage Business Investment and capitol formation, improve the nations infrastructure, raise the quality of our educational system and support innovation and the adoption of new technologies. I will now turn to the implications and the outlook of Monetary Policy. With ongoing strengthening and labor Market Conditions and an out look for inflation to return to 2 over the next couple of years, the fomc as gradually increased accommodation. They raised the target range for the federal funds rate by 1 4 Percentage Rate at both our march and june meetings with the range standing at 1 to 1 and a quarter percent and in october they began the Balance SheetNormalization Program which will gradually and predictably reduce our securitys holdings. The committee set limit on the pace of Balance Sheet reduction. Those limitsicide guard against outside moves in Interest Rates and other potential market strains. Indeed there as been little, if any market effect associated with the Balance Sheet run off to date. We do not foresee a need to alter the Balance Sheet program but as we said in june, we would be ready to resume investments if a material deteariation were to warrant a sizeable reduction in the federal funds rate. Changes to the target range for the federal funds rate will continue to be the committees primary means of adjusting the stamps of Monetary Policy. At our meeting earlier this month we decided to maintain the existing target range for it federal funds rate. We continue to expect the gradual increases to the federal funds rate will be aproep ret to sustain a a healthy labor market and around the 2 objective. That expectation is based on the view that the current level of the federal funds rate remains somewhat below its neutral level. That is the rate neither expansionary or contractionary and keeps the economy operating on an even keel. The neutral rate currently apeer ooze be quite low by historical standards, implying the federal funds rate would not have to rise much firther to get to a neutral policy stance. If the neutral level rises somewhat over time, as most fomc participants expect, additional gradual rate hikes would likely be appropriate over the next few years to sustain it economic expansion. Of course policies not on a preset course. The appropriate path will depend on the Economic Outlook as informed by incoming data. The committee is noted that it will carefully monitor actual and expected inflation developments relative to its semetric inflation goal. More generally in determining the timing and size of future Interest Rate agistments, the committee will take into account a wide range of information including measures of labor Market Conditions, indicators of inflation pressures and inflashz expectations and readings on financial and international developments. Thank you. I would be pleased to answer your questions. The Congressional Budget Office has noted the treasury is on track to lose Corporate Tax revenue because of our high Corporate Tax rate and world wide system are if hencouraging companies to shift income and even head quarter overseas. Could a more Competitive International treatment of our u. S. Companies reverse this trend by making america a more attractive place to invest in . So, i think this is an important question for congress to consider and t