Level thats needed to provide for new entrants in the labor market, we do have a strengthening economy. With policy accommodative all youre doing in raising rates is removing a bit of accommodation heading toward a neutral pace. And i see that is appropriate. Were not moving so aggressively as to put a break on continued improvement in the labor market. But i think that thats a prudent move to move in a gradual way with unemployment now. And not only the Unemployment Rate, but i think any indicator of labor Market Performance and tightness that you could look at whether its household perceptions of the availability of jobs, difficulty that firms report in hiring workers, the rate at which workers are quitting their jobs, the rate of job openings all of these indicators do signal a tight labor market. Now, with inflation below 2 , i think its appropriate that the labor market be that tight but on the other hand, i think we want to avoid the risk. We want to keep the expansion on sustainable path and avoid the risk that at some point we need we find ourselves in a situation where weve done nothing and then need to raise the funds rate so rapidly that we risk a recession. So moving to some extent in a timely way to remove accommodation with a Strong Economy and continued labor market strength, the committee believes is an appropriate management of risks. But we are attentive to the fact that inflation is running below our 2 objective that we face that situation now for a long time and its really quite essential that we put in place policies that will succeed in moving inflation back to our 2 objective and its a symmetric objective so thats a risk that we face as well the committee believes we have conditions in place for inflation to move up but thats also a risk and those things point, i think, to a gradual pace of reducing accommodation. Hi. Nancy marshall from market place. Recently a group of economists sent the fed a letter earlier this month disagreeing with your 2 inflation target and saying they would like the economy to run a bit hotter they dont think the labor market is so tight you say youre committed to the 2 target. But what do you say to them . So its a time that we adopted the 2 target. It was back in 2012. We had a thorough discussion of the factors that should determine what our inflation objective should be. And, you know, i believe that was a well thought out decision. Now, at the moment, we are highly focused on trying to achieve our 2 objective and we recognize the fact that inflation has been running below. And its essential for us to move inflation back to that objective. Now, weve learned a lot in the meantime and assessments of the level of the neutral likely level currently and Going Forward of the neutral federal funds rate have changed and are quite a bit lower than they stood in 2012 or earlier years. And that means the economy has the potential where policy could be constrained by the zero lower bound more frequently than the time we adopted our 2 objective. So its that recognition that causes people to think we might be better off with a higher inflation objective. This is one of our most critical decisions and one were attentive to evidence and outside thinking its one that we will be reconsidering at some future time and its important for our decisions to be informed by a wide range of views and research which is ongoing inside and outside the fed. But a reconsideration of that objective needs to take count not only of benefits of a higher in potential benefits of a higher inflation target, but also the potential costs that could be associated with it. It needs to be a balanced assessment but i would say that this is one of the most important questions facing Monetary Policy around the world in the future. And we very much look forward to seeing research by economists that will help inform our future decisions on this. Thank you don lee with the l. A. Times. The feds projections continue to show the longer run federal funds rate at 3 the markets are expecting 2 how big of a concern is that gap in your mind what are the reasons for the disconnect and, you know, what are the implications and real risk for the economy . So let me first say its not straightforward to determine exactly what expectations are embodied in market prices because theyre a term premia that affect these rates. And they may not really be as low as one would infer from a straight read. That said, in part, expectations reflect estimates of what the neutral federal funds rate is and how its likely to evolve over time. And views have changed about that over time and there is a good deal of uncertainty about it so weve recently put out charts that try to show what the range of uncertainty is around our path for the federal funds rate especially as one goes further out. Theres a good deal of uncertainty. And that reflects like all the shocks that can affect the evolution of the economy and also the fact were quite uncertain ourselves about what the likely evolution will be of the neutral federal funds rate so we do try to write that down and provide the public with information about our current expectations and the median now stands at around 3 . But we have uncertainty about that many of my colleagues and i think the current neutral level is lower than that and as i said in my opening statement, the fed funds rate path reflects an expectation that that neutral rate will be moving up some in future years but that remains uncertain i think thats something that Market Participants are trying to assess and we will be as well [ inaudible question ] the difference in the gap between the expectation and what the feds projections are for longer run federal funds rate . Our expectations are a little changed. I mean, the projections we released today are essentially identical to those and i think the market is aware of the views of participants and is assessing evidence itself to inform their own views and its important that the market take an independent look. And that we get to understand and see how Market Participants are interpreting evidence on the evolution of the economy so its not an unhealthy thing to have such a gap and as i said, our own views are not set in stone but are likely to evolve as well over time. Associated press. Back in 2013 when you the fed first raised the possibility of trimming its bond purchases, it created a bit of turbulence. The taper tantrum caused you to reassess your communication of that process this trimming of the bond holdings, the Financial Markets seemed to be taking that in a better way if down the road, though, you see that there is more of an adverse reaction, are you planning to make any changes perhaps change the caps to 30 billion and the 20 billion caps how do you assess how youll handle that Going Forward . So we have indicated for quite some time i guess since our 2014 normalization princi l principa principals, that we wanted to reduce our Balance Sheet in a gradual and predictable way. And we have tried systematically how we would do that is our plans have evolved and todays announcement is another step in providing further details about how we plan to proceed so that when this plan does go into effect, no one is taken by surprise and Market Participants understand how this will work i think that we, the plan is one that is consciously intended to avoid creating market strains and to allow the market to adjust to a very gradual and predictable plan my hope and expectation is that when we decide to go forward with this plan, that there will be very little reaction to it. That its clear how we intend to proceed. And that this is something that will just run quietly in the background, though, for a number of years leading to a reduction in the size of our Balance Sheet and in the outstanding stock of reserves and that its something that the committee will not be considering from time to time. We think this is a workable plan and it will as one of my colleagues described it, itll be like watching paint dry that this will just be something that runs quietly in the background so thats my expectation and our intention. Of course if it turns out that there is a surprise and a substantial reaction, that is something we would have to take into account in deciding on the appropriate stance of policy Michael Mckee from Bloomberg Television and radio i want to get your reaction. The treasury secretary and others have suggested that dodd frank regulation and the way its been applied have restricted credit growth in the economy. Banks are not making loans they otherwise would. And that has slowed growth do you agree with that and if you get a new vice chair of supervision who wanted to ease up on regulation, would you go along with that . Also i wanted to ask you, its been reported the president has congratulated you on being a low interest person. Would you agree with that characterization of your philosophy well, with respect to the impact of Credit Conditions and Bank Regulation on slow growth, ive previously in testifying indicated that i dont think that our regulations have played on Important Role at least broadly speaking in impeding credit growth and the growth of the economy. And ive pointed in the past to a number of statistics suggesting that credit Growth Continues to be healthy. Including among Smaller Community banks that are most concerned with Regulatory Burden i think when banks are undercapitalized and weak, that impedes credit growth. And when banks are strong, theyre in a much better position to lend so thats been a view that identiive stated previously. Now, in terms of regulation, the treasury recently issued on monday a detailed report and thats quite a complicated document with lots of recommendations in it. I havent had a chance to review it thoroughly, so i dont want to comment on too many details but i would say it underscores the importance of capital liquidity, stress testing, and resolution planning in having a safe and sound Banking System which are views that i and my colleagues have long espoused. Regulatory burden when its possible to ease it and a good deal of the treasury report is focused on Regulatory Burden thats something that all regulators should be looking to do we strongly believe in the importance of tailoring our regulation to the size and complexity of institutions of finding ways of relieving burdens for community banks. We have had a number of initiatives already in that direction looking for ways, for example, to simplify requirements for community banks. And well continue in that sense in those areas share the views in the treasury support. So there are a number of thinking where there are probably some areas they are likely to have differences but quite a number of areas where well likely be able to and already are taking actions that are consistent with those recommendations. And the characterization of you as a low Interest Rate person well, i have felt that its been appropriate for Interest Rates to remain low for a very long time. We are in the process of as the economy strengthens, normalizing Interest Rates but weve had a lot of years in which Interest Rates have been low. I thought it was necessary to support the economy at that time and was strongly in favor of those policies thank you karen with market news international. Today you guys outlined the details of the plans when you begin to end reinvestments but you stopped short of saying when it would be implemented only saying this year. And adding that depended on how the economy evolved. Can you tell us why you decided not to go ahead with it today . Are there certain conditions youre looking for then as a second question, do you think that the you could raise rates and begin implementation of the plan at the same time . Thank you. So we have tried as meticulously as we can to provide advanced warning to markets about how we would go about doing it so Market Participants can prepare and todays announcement is another step in that process so we certainly wanted to get this information out before we actually undertake the beginning of this plan and as the statement says, we made no definite decision on the timing of the plan. But the timing o of initiating the plan but if the economy evolves in line with our expectations which, you know, we will be watching, always are, we could put this into effect relatively soon you asked about whether or not we would do that or raise rates at this same meeting i would say weve made no decision about that. And it really hinges on the outcome and our assess of conditions hi. Politico you mentioned the treasury report i just wanted to ask, how much weight do you give those recommendations in considering, you know, potential regulatory changes moving forward and also as it relates to the volcker rule, you said in the past it might be a good idea to reduce the burden on community banks. But it also talks about Trading Assets and liabilities above a certain level. And i was wondering if you think that thats an idea thats worth exploring. So we have previously suggested exempting community banks, smaller banks, entirely from the rule. And a number of my colleagues have spoken about the volcker rule implementation of it is complex. Im certainly open to looking at ways to to reduce Regulatory Burden in that area. The report endorses a restriction on propri teetary trading. So it injects a portion of the volcker rule but on implementation, its true that the rules were impartly reflecting the way the legislation is written were necessarily complex. We do have some ideas for how we might simplify the rule. Certainly its something its something were quite open to looking at [ inaudible question ] i mean, treasury has a set out a list of objectives for regulation that im sympathetic to ways to reduce the regulatory kbu burden when it can be done without sacrificing safety and soundness or creating systemic risks. Thats something that all regulators should coming back and looking at where weve created burdens in ways in which we can simplify to reduce, that is while we may not agree on every detail, certainly suggestions made there are ones we will Pay Attention to mike derby from news wires. In light of the plans to trim the Balance Sheet later this year, what have you learned about qe as a tool for Monetary Policy when they were launched it wasnt something you had engaged in that scale before a lot of fears that it was going to create hyperinflation that hasnt come to pass so in light of qe potentially is a tool for the future. It might come back again what have you learned about how it works in the economy . Where do you see it affect things what are the Lessons Learned of the experience thanks. Thats a great question. Economists have done a great deal of work trying to evaluate. It has worked in it put some downward pressure on longer term Interest Rates socalled term premiums embedded in longer term Interest Rates. And its something thats difficult to pin down. But it has caused quite the contrary that was not my expectation, but i do remember when people were afraid that that would happen. Even with a large Balance Sheet we retain the ability to move the fed funds rate and set it as appropriate for the needs of the economy. So i think we have learned that where ive said we want the fed funds rate and move in Interest Rates. Thats our goto number one main policy tool. But if we were to hit the lower bound and constrained in our use of that tool, certainly Forward Guidance of the type that weve provided, i believe based on the evidence of how they worked what to remain part of our tool kit and we have said in the bullets we released today on our Balance Sheet that in episode of extreme weakness in the future, those are things we would consider Going Forward. Is 4. 5 trillion a limit to how high you want to push the Balance Sheet or could you see it higher if you needed it to . Weve had no discussion of that issue our focus is on getting it back to a more normal size. The use of qe in the United States relative to the size of our economy is not as high as its been in other countries that have employed it. Thats something we havent seriously discussed. Patrick with cnn. Its Workforce Development week at the white house and you highlighted several job training successful job Training Programs in your speech in march the president s budget has a 40 cut to job Training Programs whats your response even though they expect to expand apprenticeship programs and do you believe job Training Programs and apprenticeships are needed to help fix the job gap in the economy im not going to comment on the president s budget and these programs can be undertaken at many Different Levels ive seen many nonprofits and states and local authorities put in place, programs that look to me to be successful. I think we have a tight labor market and one where employers have jobs where theyre finding difficulty identifying workers with the appropriate skills in my own discussions with businesses what i hear more of and this is something i think is a grea