Assessment. And of course, there were a lot of practices in connection with mortgage lending that really need to be changed. We dont want to go back to those days, but it is important to clarify for us, to work to clarify the rules around mortgage lending to create an environment of greater certainty for lenders to be willing to extend mortgage credit. Good afternoon. Jason lang with reuters. Chairman yellen, the fed has slashed its growth projections for this year, and youve gone to pains to explain that there is uncertainty in the path of Interest Rates and the economy. And yet, the feds central tendency projections for 2015 and 2016 remain quite strong. Are you confident that the u. S. Economy has entered a period of sustained, abovetrend Economic Growth . Thank you. Well, when you say confident, i suppose the answer is no, because there is uncertainty, but i think there are many good reasons why we should see a period of sustained growth in excess of the economys potential. We have a highly accommodative Monetary Policy. We have diminishing fiscal drag. We have easing credit conditions. We have households or becoming more comfortable with their debt levels and are more able to surface debt in an improving job market. We have rising home prices and rising equity prices and an improving global economy, at least in my estimation. So, i think all of those things ought to be working to produce abovetrend growth, and i think thats whats reflected in the forecast. But nevertheless, as i said, of course there is uncertainty around that projection. You know, nevertheless, the labor market has continued to improve. And over a number of years in which admittedly growth has come in at a disappointing level, weve still seen the labor market broadly, broadly improve, and i expect that to continue. Steve beckner with m i. Madam chair, you mentioned that there were discussions of the mechanics of normalization, as you put it. I assume that that involved some review of the it was the third anniversary of the june 2011 exit principles. I wondered if i could get you to elaborate, in particular, is the committee reaching consensus about the reinvestment and rollover policies, the timing of discontinuing those policies . Id be interested in your personal view on that. Well, reinvestment policy was included in our 2011 principles and its one of the things that we are discussing and reconsidering. We have not yet reached we have made quite a lot of progress in our discussion, but we have not yet reached conclusions about that or other aspects of our package. There are a couple of things chairman bernanke indicated in contrast to our 2011 principles that we would be very unlikely to sell mortgagebacked securities, and that remains the case. Broadly speaking, some of the principles that were incorporated in that 2011 package, the notion that we fully expect our Balance Sheet to shrink considerably over time, back toward more normal levels, toward levels that would be consistent with efficiently conducting Monetary Policy. Thats still an expectation. I believe its an expectation that eventually, our portfolio will consist largely of treasuries, eventually. But there are quite a number of details. We have a number, as you know, a number of tools that we can deploy as we move to normalize policy. Interest on excess reserves, our overnight rop facility, term repurchase agreements with the markets or term deposit facil y facility, and exactly how to deploy that set of tools to meet our objective of raising the general level of shortterm rates when the time becomes appropriate and how best to communicate to the public and to markets how we are conducting policy and what our objectives are. Those are things were discussing, and i hope we will be able to come back with a full description, or lets think of it as a revised set of exit principles, later this year. Madam chair, donna borack with american banker. One of the outstanding reform issues on the plate of the fed is to handle the risks related to shortterm wholesale funding. Youve been very supportive of this issue, but weve really heard little progress so far on where things stand. Can you please explain to us why its taken so long to get this proposal out, what are some of the aspects that the fed is considering in their approach to how they roll out this rule and where they may be in that process . Thank you. So, im afraid that i cant give you a detailed timetable for when we will move forward with that rule. Ive been supportive. Governor trujillo and others have been supportive in taking some action to diminish the incentives for heavy reliance on shortterm funding. We still see that as one of the risks to the Financial System that wasnt really addressed in the riskbased Capital Requirements that we put out or in the liquidity coverage ratio thats out for proposal. Governor trujillo has suggested one approach could be to impose a Capital Requirement thats related to reliance on wholesale funding. And in my own past comments, ive been supportive, but im afraid at this point, and this remains very much on the table, to take some action to address this. It certainly remains on the table as an unfinished agenda item, but i dont have a detailed timetable for you. [ inaudible ] im just not certain. I just dont have a detailed timetable for you. Im sorry. Madam chair, greg with the economist. This is partly a followup to Steve Liesmans question. How would the economy respond if inflation pushed above target before full employment . Your colleague has suggested that the committee might consider allowing inflation to temporarily overshoot because that might achieve a larger, faster reduction in unemployment. And will Financial Stability regulations play a role in when and how fast the committee normalizes Interest Rates . So, with respect to the question of overshooting, let me start by saying that inflation continues to run well below our objective. And we are still some ways away from maximum employment. And for the moment, i dont see any tradeoff whatsoever in achieving our two objectives. They both call for the same policy, namely, a highly accommodative Monetary Policy. So, at best, overshooting of inflation or the thought that we will reach our inflation objective before weve attained maximum employment, i suppose i would see at most as a risk that we could face somewhere down the road. Symmetrically, its also conceivably a risk that we would reach our maximum employment objective before weve actually attained our inflation objective. So, there are different ways in which we could conceivably there could conceivably arise policy conflicts or tradeoffs somewhere down the road. Now, quite some time ago, the fomc adopted, and we reaffirmed just in january, a statement on our longerrun goals in policy strategy. And with that statement said, is that, first of all, whenever either inflation or employment are away from their preferred or mandateconsistent levels, it will always be the fomcs policy to make sure that we get back to those target levels over the medium term. But a principle thats embodied in that statement is that the committee will follow a socalled balanced approach in deciding on its policies. And essentially, that means that when we see some conflict between achieving the two objectives, that we would consider in deciding on a policy just how far we are from achieving each of the objectives and if the distance from achieving an objective is particularly large, it would be consistent with the balanced approach that we would tolerate some movement in the opposite direction on the other objective. But balanced approach is the general policy strategy, i think wed follow. Michael mckee from Bloomberg Television and radio. Id like to ask you about your signaling mechanism Going Forward. At this point, you havent decided on reinvestments. Youve told people dont pay any attention to the dot plot. And your mandates in inflation and unemployment are backwardlooking, lagging indicators. So, if something should surprise in the economy, with only four steps and press coxsnferences a year, how do you signal to the markets whats happening so you dont risk an event like last september, when people were surprised, or some sort of credibility problem where people feel youre falling behind the economy . Well, you know, again, we are very attentive to unfolding economic developments and understand that there can be surprises and twists and turns in the road so that the forecast that weve made become no longer appropriate and we need to respond to unfolding developments. Im personally committed to communicating with the public whenever communication is appropriate. We have four press conferences, but i would feel it appropriate for me to either have additional communications, meetings with the press or to give speeches or to, in a variety of opportunities i have to make clear what the committees thinking is and my colleagues as well i think would feel it entirely appropriate to communicate changes in our views. Pedro nacosta from dow jones news wires. Thank you very much. Since were currently having a world cup, i thought it would be valid to ask a question about the world, and im a little surprised that the optimism of your forecast, given, you know, the darkening outlook overseas. Youve got the conflict in the ukraine, right, escalation of war in iraq with implications for oil prices to potentially have Global Economic impact. You have a european recovery thats still fairly week and emerging markets slowing down sharply. Do you think the u. S. Can be a lone engine of economic recovery globally . And if i could follow up quickly on gregs question. Because you talked about the two sides of the mandate, but you didnt quite answer the Financial Stability part. Do you think, is Financial Stability currently preventing the fed from being more accommodative than it would like . And if not, when do you expect that to happen, if at all . Thank you. So, let me im sorry i didnt answer the last part of gregs question and the last part of yours, let me start there. With respect to Financial Stability, we monitor potential threats to Financial Stability very carefully, and we have spoken about some. Ive spoken in recent congressional testimonies and speeches about some threats to Financial Stability that are on our radar screen that we are monitoring, trends in leverage le lending and the underwriting standards there, diminished risk spreads in lowergrade corporate bonds. Highyield bonds have certainly caught our attention. There is some evidence of reach for yield behavior. Thats one of the reasons i mentioned that this environment of low volatility is very much on my radar screen and would be a concern to me, if it prompted an increase in leverage or other kinds of risktaking behavior that could unwind in a sharp way and provoke a sharp, for example, jump in Interest Rates. And weve seen what effect that can have on the global economy, and i think its something that its important to avoid. But broadly speaking, if the question is, to what extent is Monetary Policy at this time being driven by Financial Stability concerns, i would say that, while i would never take off the table that monetary poli policy could in some circumstances respond. I dont see them shaping Monetary Policy in an important way right now. I dont see a broadbased increase in leverage, rapid increase in credit growth or maturity transformation, the kinds of broad trends that would suggest to me that the level of Financial Stability risks has risen above a moderate level. And we are using supervisory tools and regulations, both to make the Financial System more robust and to pay particular attention to areas where weve spotted concerns, like leverage lending, which is very much the focus of our supervision. Now, lets see. There was a first part to your question. And the first part was about global risks. And we always Pay Attention to global risks and the likely evolution of the global economy. You expressed a lot of pessimism about emerging markets, and i see it more likely that well see moderate growth and a pickup the there. Of course, there are geopolitical risks, the middle east, developments in iraq, of course. Theyre not only a humanitarian concern, they are a concern with respect, potentially, to Energy Supplies and prices. And so, i would certainly list that as something in the catego category, risks to the outlook. Peter barnes, fox business. Just to follow up a little bit on what pedro asked about, specifically, what about equity markets . I mean, right now, today, the s p 500 is on track to close at another record high. You have said that you have not seen any evidence of bubbles in equity markets and that they have been trading within historic norms. Is that still the case today . So, i dont have sense the committee doesnt try to gauge what is the right level of equity prices, but we do certainly monitor a number of different metrics that give us a feeling for where valuations are relative to things like earnings or dividends and look at where these metrics stand in comparison with previous history to get a sense of whether or not were moving to valuation levels that are outside of historical norms. And i still dont see that. I still dont see that for equity prices broadly. Anna lynn kurtz with cnn money. Thank you, chairman yellen. Im wondering, whats the feds general exec asian fpectation f growth this year and next year . And if inflation outpaces wage growth, does that scenario make you more hesitant to raise the federal funds rate next year . Or if conversely, wages rise just enough to keep up with inflation, moving in lockstep, lets say, is that enough to satisfy what youre looking for in the job market . Well, thanks. Thats a great question. You know, i see compensation growth, broadly speaking, as having been very well contained. By most measures, compensation growth is running around 2 . So, thats real wage growth or real compensation growth. Its essentially flat, rather than rising. And low wage growth really has not been rising in line with productivity. My own expectation is that as the labor market begins to tighten, we will see wage growth pick up some to the point where real wage growth, where compensation or nominal wages are rising more rapidly than inflation, so households are getting a real increase in their takehome pay. And within limits well, that might be signs of a tighter labor market, within limits, its not a threat to inflation, because consistent with the level of inflation that we have or our 2 inflation objective, we could see wages growing at a more rapid rate and a somewhat more rapid rate, and indeed, that would be part of my forecast of what we would see as the labor market picks up. If we were to fail to see that, frankly, i would worry about Downside Risk to Consumer Spending. So, i think part of my confidence in the fact well see a pickup in growth relates to the fact that i think Consumer Spending will continue to grow at a healthy rate. And in part, thats premised on some pickup in the rate of wage growth so that its rising greater, more than inflation. Marty koretzinger, associated press. Todays statement repeated a phrase thats been used, that the committee has been using, that theres likely to be a considerable period between the end of the bond purchases and the first hike in the federal funds rate. In march, you gave us some guidance, trying to help us understand that by saying that that is hard to define, but it could mean six months. Is that a time frame that you still feel comfortable with, and if you feel like it needs to be modified, could you give us an assessment of the the markets seem to expect a second rate hike in the first half of next year. Is that a good assessment . So, what i want to say, the guidance that i want to give you is say there is no mechanical formula whatsoever for what a considerable time means. The answer is to what it means is it depends. It depends on how the economy progresses. The Committee Said very clearly in their statement that what they would be looking at and deciding on the timing of Interest Rate increases would be the progress were making in achieving our objectives, how far we are from achieving our labor market objective and our inflation objective, and that we will be assessing that progress, and thats the key determinant of when Interest Rate increases are likely to come. There is no mechanical formula. Thank you. Greg rob from marketwatch. There was a report this week in a salmoncolored newspaper, i wont mention, that the fed is thinking about, or regulators in washington are thinking about an exit fee for bond mutual funds. This has sparked a lot of comments. Would you care to comment on this . I am not aware of any discussion of that topic inside the Federal Reserve, and my understanding is that that is a matter that is under the purview of the s. E. C. Thank you very much. All right. Fed chair janet yellen completing her News Conference. As usual, wideranging conference to discuss Monetary Policy, which they did announce no real big changes in Monetary Policy. They will taper back another 10 billion in purchases of treasuries and mortgagebacked securities, which was expected. They still see inflation below target range right now, which was expected, and another bit of a headline, when they will increase Interest Rates, it depends. Yes. Which is about expected as well. Recalling Janet Yellens