Rate by one quarter of percen percentage point. Our decision reflects the progress the economy has made and is kpekexpected to make of maximum employment and price stability objectives thats signed to us booy law. We released today of principles and plans and Additional Information on the process that well follow in normalizing the size of our Balance Sheet once we determine it is appropriate to do so. I will have more to say of our Interest Rate decision and our Balance Sheet policy. First, i will review recent economic developments and the outlook. Following a slow down in the first quarter, Economic Growth appears to free bounded and of a moderate growth so far this year. Household spending which is particularly soft earlier this year has been supported by the solid fundamentals including con going improvement in the job market and relatively high levels of Consumer Sentiment and wealth. Business investments which was weak from much of last year has continued to expand and exports showing greater strengths this year in part reflecting pick up of global rogrowth. We continue to expect that the economy will expand at a moderate case of the next few years. In the labor market job gains average of 160,000 per month since the start of the year. A solid rate of growth that although a little slower than last year, we mean well above estimate necessary to absorb new trans of the labor force. A low level by historical standards and modestly below the median of participants estimates of its longer level. The market utilization have improved this year. Given the under lined downward trend in participation, stemming largely from the aging of the u. S. Population relatively steady Participation Rate is a further sign of improving conditions of the labor market. Looking ahead, we expect that the job market will strengthen some what further. Turning to inflation, the twelve months changed and price index for expenditure was 1. 7 in april. Down some what over the past few months. Core inflation which excludes the volatile food and Energy Categories and better indicator of future inflation have inch slower. Slower readings on inflation have driven significantly by what appears to be one off reductions in certain category of prices such as Wireless Telephone Services and prescription drugs. These price declines will as a matter of arithmetic restream of the figures until the low Mark Readings drop out of the calculations. However, with employment near the maximum sustainable level, the market continuing to strengthen, the committee expects inflation to move up and stabilize around 2 of the next couple of years in line with our longer run objectives. Nonetheless, in light of the softer readings, the committee is monitoring Inflation Developments closely. Let me turn to the Economic Projections that Committee Participants submitted for this meeting. As always, participants condition their projections on their own individual views of appropriate Monetary Policy which in turn depends on each participant assessments of many factors that shape the outlook. The median projection for growth of inflation adjusted growth domestic product where real gdp is 2. 2 this year, slightly above its estimated longer run rate. The median projections for the Unemployment Rate stands a at it takes down to 4. 2 of 2018 and 2019. Modestly below the median estimate of its normal run rate. Finally the inflation projection is 1. 6 this year and rises to 2 in 2018 and 2019. Compared with the projections made in march, real gdp growth is little change and Unemployment Rate follows a lower path and inflation although marked down this year is unchanged. Returning to Monetary Policy for the past year and a half, the fomc have been gradually increasing its target range for the federal fund rates as the economy is continuing to make progress towards our goal of maximum employment and price stability. Our decision today continues this process. We continue to expect of the ongoing strengths of the economy will warrant gradual increases of funds rate to sustain a healthy labor market and stabilize inflation around our 2 longer runobjectives. Thats based on our view that the fund rate remains below our mutual level, it is Movie Theater expansion nar nor contractionary. The federal funds rate would not have to rise all that much further to get to a neutral policy stance. Because we expect neutral of the federal funds rate to rise some what overtime, additional gradual rate hikes are likely to be appropriate over the next few years to sustain economic expansion. Everyone so the committee continues to anticipate that the longer run neutral level of the federal funds rate is likely to remain below levels that prevail in previous decades. This few is consistent with participant projections of monetary policies. The median projections of the federal fund rates is 1. 4 at the end of this year and 2. 1 of the end of next year and 2. 9 at the end of 2019 in line of its estimated longer run value. Compares with the projections made in march, the median path to the federal funds rate is essentially unchanged. As always, the Economic Outlook is highly uncertain and participants will adjust their assessments of the appropriate path of the federal funds rate in response to changes to their Economic Outlooks and views of the risks to their outlooks. As i have noted previously policy is not on a preset course. Let me now turn to our Balance Sheet. As i noted in our statement, we are continuing to maintain the size of our Balance Sheet by reinvesting proceeds for securities and principle payments from agency debt and mortgage back securities. Provided that the economy evolves broadly as the committee anticipates, we currently expect to begin implementing a Balance SheetNormalization Program this year. Consistent with the principles and plans, we release in 2014. This program would gradually decrease our reinvestment and initiate a gradual and decline of our Security Holdings. Our policy normalization principles in plans that we release today provides further information. For both treasury and Agency Securities well reinvest proceeds for holdings only to the extent that they exceed gradually rising caps on reductions of our Security Holdings. Initially these caps will be set at relative lily low levels. 6 billion per month treasuries and 4 billion per month in agencies. These caps will gradually rise over the course of the year to maximum 30 billion per month for agencies and securities and will remain in place through the normalization process. By limiting the volume of securities, the private investors will have to absorb as we reduce our holdings of outside Interest Rates and other potential market strains. As i noted when our Security Holdings begin to gradually decline so will to of the reserve balances of the banking system. At some point down the road, the community will bring the decline of the Balance Sheet to an end as quantity reserve is normalized. I cannot tell you of the normal run of reserve balance will be because thatll depend on the committees decisions about how to implement Monetary Policy most efficiently and effectively in the longer run as well as a number of as yet unknown elements including the Banking Systems future demands for reserves in various factors that may affect daily supply of reserves. What i can tell you is that we anticipate reducing reserve balances and overall Balance Sheet to level below those scenes in recent years but larger before the financial crisis. As readers of our minutes know the committee have discussed potential long run frameworks for implementing Monetary Policy. Decisions about appropriate longer framework do not need to be made for quite some time and our futures deliberations will benefit from the experience that well gain during the normalization process. At this point, i will just point out our Current System is working well and has some important advantages. In particular it is simple and efficient to operate does not require active management of the supplier reserves and most importantly provides good control over the federal funds rate and effective transmission of changes in the federal funds rate to broader money market rates. Because our Current System is likely compatible with a much smaller quantity of reserves our plan for gradually reducing the Balance Sheet does not constrain our futures options for implement Monetary Policy. Finally as noted in todays addendum, the committee affirmed of changing the target range for the federal funds rate is our primary means of adjusting the stance of Monetary Policy. In other words, the Balance Sheet is not intended to be an act of tool for Monetary Policy in normal times. However, the kmicommittee would prepared to resume investments of the Economic Outlook to warrant a sizable reduction in the federal funds rate. More generally the committee will be if future Economic Conditions were to warrant a more accommodating monitoring policy can be achieved solely by reducing the federal funds rate. Thank you and i will be happy to take your questions. The principles that you released today of Interest Rate normalization is well under way. With the latest rate increase, do you believe normalization is now well under way . Thats something that we have set for some time and i have previously been asked what well under way means, i said i dont want to define that in quantitative terms but in qualitative terms so there is no specific level of the federal funds rate that means we are well under way but it is also a question of not only the current level but our conference in the outlook and our projections for the future path of the federal funds rate. We have increased our federal funds rate target now several times. Our outlook is that we anticipate further increases this year and next year for federal funds rate and our statement indicates that the economy continues to evolve in the manner that we expect that we would feel the conditions will be in place to begin this process this year. I am wondering if you have talked to the president or members of the staff of the possibility of staying on as chair for a second term. I am wondering if you would consider doing that, is it something that you thought doing and finally there are three vacancies on the feds from you have any comment for the president to nominate any positions . What i have said for my situation that i fully intend to serve out my terms as chair which ends in early february. I have not had conversations with the president about our future plans and i do very much hope and i note that they have been working hard to identify appropriate nominees for the open slots and i do very much hope that there will be nominations in the not too distant future and the senate will take that up. I look forward to having a full board. Do you desire to stay on . I dont have anything for you at this point. I am from the financial times. We now have a long streak of weak Inflation Numbers by the cpi this morning as well and expectations are dedeclining. How does that interact with our policy outlook and further disappointments for rate hikes or delaying Balance Sheet run offs. How do you think those two responses for inflation . Let me just say as i emphasized in my statement and always say monetary policies is not on a preset course. We indicated in our Statement Today that we are close closely monitoring Inflation Development and taken note of effect that there had been several weak readings on core inflatio inflations. Our statement indicates that we expect inflation to remain low on the near term. We continue to fill with a strong labor market thats continuing to strengthen, the conditions are in place for inflation to move up. Now obviously, we need to monitor that very carefully and ensure especially with roughly five years of inflation running under our 2 objective that is gold to which the committee is strongly committed and we need to make sure that we have in place the policies that are necessary to achieve 2 inflation and as i pledge that well do that but let me say with respect to recent readings, it is important not to over react to a few readings and data on inflation can benoit noisy. As i pointed out there is been some factors held down inflation in recent months of a huge in cell Telephone Service plan prices. Some declines in prescription drugs. We had an exceptionally low reading on core pc in march. That will continue to hold down 12month changes until that reading drops out. But we are this mornings reading on the cti showed weakness in a number of categories. And its certainly something that we will be closely monitoring in the months ahead. Were focused on making our policy decisions on the medium term outlook. And we will, you know, be looking carefully at incoming data. And as always, revising our outlook and policy plans as appropriate. [ inaudible question ] so continue as todays actions show to feel that the economy is doing well, is showing resilience. We have a very strong labor market. An Unemployment Rate thats declined to levels we have not seen since 2001. And even with some moderation in the pace of job growth, we have a labor market that continues to strengthen and policy remains accomodative. Its important that inflation move up to 2 , we continue to expect that and believe that conditions are in place. But we will monitor incoming data, obviously, and be attentive to rethinking our outlook if it seems appropriate. Reporter from bloomberg news. I hate to belabor the point on inflation, i was wondering, i hear a lot of the socalled niru, your confidentiversation d other committee members. Its unobservable thing, at best its an estimate. And the assumptions in there seem to me like the Economy Today is much like the economy yesterday, when, if anything, weve learned that the postrecession economy is vastly different than it was before the recession. So im wondering, something youve talked about is to focus more on the change in inflation, actual inflation, and something going up or is it go down and basing policy more on that. What would be the risk of that and why not adopt that if you have such a long period of underperformance . We are closely looking at the actual performance of inflation. And altering our views on the basis of discrepancies between what we see and our expectations. And while it is very difficult to pin down what is the longer return normal rate of unemployment, and theres a great deal of uncertainty about it, and its hard to pin down, especially given the fact that the socalled phillips curve appears to be quite flat, that means that inflation doesnt respond very much or very quickly to movements in unemployment. Nevertheless, that relationship i believe remains at work. We have seen that operate historically. Now, in the face of very low unemployment that we have seen, wage growth has picked up somewhat, but it remains low. And inflation is influenced by a number of different factors. But we certainly havent seen much or any evident upward pressure on inflation. In light of that, the committee has successively moved down the normal run of rate of unemployment and in this projection its moved down to 4. 6 , a tenth lower than it was last time. So while the Unemployment Rate is below that, its not that much its not that much below it. Reporter the washington post. We saw measures of consumer rises based on tax cuts and infrastructure spending. Some of those policy changes have been slower to materialize than initially expected. How do you view the positive and negative risks from policy changes to your outlook and has your view changed on that at all in the last six months . So i would say that business and Household Sentiment remains quite strong, although many forecasters have pushed back somewhat on the timing of expected policy changes such as changes to tax policy or fiscal policy more generally. I would say that based on my observation of actual spending behavior, and my discussions with our wide range of contacts, that i havent seen very much evidence that thus far expectations of policy changes have driven substantial changes in either Consumer Spending or investment spending. So i really wouldnt expect any significant pullback. Many of our business contacts, i think their confidence remains high. Theyve not really changed their plans yet. And the have a wait and see attitude. Reporter daniel applebaum, the new york times. Measures of financial conditions show that since the fed started raising Interest Rates two years ago, financial conditions