The Fed should not be responding to the ups and downs of the markets, and it is certainly not our policy to do so. But when there are significant financial developments, it's incumbent on us to ask ourselves what is causing them.
— Janet Yellen
Private sector labor market flows provide additional indications of the strength of the labor market. For example, the quits rate has tended to be pro-cyclical, since more workers voluntarily quit their jobs when they are more confident about their ability to find new ones and when firms are competing more actively for new hires.
American workers have faced serious difficulties in the labor market since the first oil shock in 1973. Since that time, the pace of productivity advance has slowed for reasons which are still not understood, lowering the rate at which living standards have advanced.
It seems to me that women have made an awful lot of progress, but they probably remain underrepresented at the highest levels of most organizations, for a variety of reasons. And it's probably going to take a long time to change that.
During the 1970s, inflation expectations rose markedly because the Federal Reserve allowed actual inflation to ratchet up persistently in response to economic disruptions - a development that made it more difficult to stabilize both inflation and employment.
A wide range of possible fiscal policy tools and approaches could enhance the cyclical stability of the economy. For example, steps could be taken to increase the effectiveness of the automatic stabilizers, and some economists have proposed that greater fiscal support could be usefully provided to state and local governments during recessions.
Yankee Stadium is a natural venue for another lesson: You won't succeed all the time. Even Ruth, Gehrig, and DiMaggio failed most of time when they stepped to the plate. Finding the right path in life, more often than not, involves some missteps.
Because food and energy prices are volatile, it is often helpful to look at inflation excluding those two categories - known as core inflation - which is typically a better indicator of future overall inflation than recent readings of headline inflation.
Are deviations from full employment a social problem? Obviously.
The financial crisis and the Great Recession demonstrated, in a dramatic and unmistakable manner, how extraordinarily vulnerable are the large share of American families with very few assets to fall back on. We have come far from the worst moments of the crisis, and the economy continues to improve.
Maturity transformation is a central part of the economic function of banks and many other types of financial intermediaries.
It certainly would be helpful going forward for deficit reduction efforts to focus on the medium term while not subtracting from the impetus we need to keep a fragile economy moving forward.
It's extremely important for our banks to have more capital, higher quality capital.
As a general principle, the American people would be well served by the active pursuit of effective policies to support longer-run growth in productivity.
It is hard to have great confidence in predicting what market reactions to Fed decisions will be.
Paying interest on reserve balances enables the Fed to break the strong link between the quantity of reserves and the level of the federal funds rate and, in turn, allows the Federal Reserve to control short-term interest rates when reserves are plentiful.
My advice would be, as you consider fiscal policies, to keep in mind and look carefully at the impact those policies are likely to have on the economy's productive capacity, on productivity growth, and to the maximum extent possible, choose policies that would improve that long-run growth and productivity outlook.
Monetary policy will, as always, respond to the economy's twists and turns so as to promote, as best as we can in an uncertain economic environment, the employment and inflation goals.
Monetary policy ultimately must be conducted in a pragmatic manner that relies not on any particular indicator or model but, instead, reflects an ongoing assessment of a wide range of information in the context of our ever-evolving understanding of the economy.
I will be the first to say that it is always difficult to get monetary policy just right. But the Fed's analytical prowess is top-notch, and our forecasting record is second to none.
The outlook for the economy, as always, is highly uncertain.
The future path of the federal funds rate is necessarily uncertain because economic activity and inflation will likely evolve in unexpected ways. For example, no one can be certain about the pace at which economic headwinds will fade. More generally, the economy will inevitably be buffeted by shocks that cannot be foreseen.
Beyond monetary policy, fiscal policy has traditionally played an important role in dealing with severe economic downturns.
If there is a job that you feel passionate about, do what you can to pursue that job; if there is a purpose about which you are passionate, dedicate yourself to that purpose.
Household spending growth has been particularly solid in 2015, with purchases of new motor vehicles especially strong. Job growth has bolstered household income, and lower energy prices have left consumers with more to spend on other goods and services.
Policy makers should be compelled to take action given the serious costs of long-term unemployment when overall unemployment is already high. A week of unemployment is worse when it is experienced as part of a longer spell.
The extent of and continuing increase in inequality in the United States greatly concern me.
I would be uncomfortable raising the federal funds rate if readings on wage growth, core consumer prices, and other indicators of underlying inflation pressures were to weaken, if market-based measures of inflation compensation were to fall appreciably further, or if survey-based measures were to begin to decline noticeably.
It's important for the Fed, hard as it is, to attempt to detect asset bubbles while they're forming.
Audit the Fed is a bill that would politicize monetary policy, would bring short-term political pressures to bear on the Fed. In terms of openness about our financial accounts, we are extensively audited.
Policies to strengthen education and training, to encourage entrepreneurship and innovation, and to promote capital investment, both public and private, could all potentially be of great benefit in improving future living standards in our nation.
An increase in shareholder value can arise for reasons other than greater efficiency, such as increased power and the resulting ability to increase profits by raising prices.
In 2006, the Congress had approved plans to allow the Fed, beginning in 2011, to pay interest on banks' reserve balances. In the fall of 2008, the Congress moved up the effective date of this authority to October 2008.
I felt that the Fed had always been the agency that picked up the pieces when there was a financial crisis, and it was invented to do exactly that.
A U.K. vote to exit the European Union could have significant economic repercussions.
The Federal Reserve's monetary policy objective is to foster maximum employment and price stability. In this regard, a key challenge is to assess just how far the economy now stands from the attainment of its maximum employment goal.
To me, the greatest asset of the Fed is the people. We have a tremendously dedicated staff... They feel proud to work for the Fed because this is such a competent, professional and well-respected organization.
Financial market participants appear to recognize the FOMC's data-dependent approach because incoming data surprises typically induce changes in market expectations about the likely future path of policy, resulting in movements in bond yields that act to buffer the economy from shocks.
As always, it would be important to ensure that any fiscal policy changes did not compromise long-run fiscal sustainability.
Stronger productivity growth would tend to raise the average level of interest rates and, therefore, would provide the Federal Reserve with greater scope to ease monetary policy in the event of a recession.
A pickup in demand in many advanced economies and a stabilization in commodity prices should, in turn, boost the growth prospects of emerging market economies.
The pace of increases in labor compensation provides another possible indicator, albeit an imperfect one, of the degree of labor market slack.
After adjusting for inflation, the average income of the top 5% of households grew by 38% from 1989 to 2013. By comparison, the average real income of the other 95% of households grew less than 10%.
By putting downward pressure on interest rates, the Fed is trying to make financial conditions more accommodative - supporting asset values and lower borrowing costs for households and businesses and thus encouraging the spending that spurs job creation and a stronger recovery.
We need to keep in mind the well-established fact that the full effects of monetary policy are felt only after long lags. This means that policy makers cannot wait until they have achieved their objectives to begin adjusting policy.
Our objective in regulation should be to put in place tough enough regulation and capital and liquidity standards that we level the playing field and make it costly.
I want to be completely clear that I strongly oppose 'Audit the Fed.'
When the time comes to raise rates, I do think there will be some benefits that flow through to savers.
A higher IOER rate encourages banks to raise the interest rates they charge, putting upward pressure on market interest rates regardless of the level of reserves in the banking sector. While adjusting the IOER rate is an effective way to move market interest rates when reserves are plentiful, federal funds have generally traded below this rate.
Starting in late 2007, faced with acute financial market distress, the Federal Reserve created programs to keep credit flowing to households and businesses. The loans extended under those programs helped stabilize the financial system.
