“Obviously we have to look at the pace of job creation, we have to look at what’s happening to labor force participation to part time employment for economic reasons, to job openings, to the pace of quits, to wage inflation and other indicators of the state of the labor market. I did say when we agreed that labor markets slack has diminished to some extent, in the inter-meeting period and clearly over a longer span of time over the last several years, obviously we have made considerable progress in moving towards our goal of maximum employment. So in spite of the fact that there is some progress on that front the committee wants to see some further progress before feeling that it will be appropriate to raise rates.” – Chairwoman Janet Yellen
“In other words, just because we removed the word “patient” from our statement does not mean we are going to be impatient.” – Chairwoman Janet Yellen
One of the key points that Chairwoman Yellen points to is that despite a 2.5 percent growth of GDP in 2014 there appears to be a slowing of growth to start 2015. A sign that while the stock market has been robust the real economy has struggled to pick up as signaled by sluggish consumer spending indicators. Housing and export growth also appears to show rising weakness ahead. Estimates for unemployment over the next two years by the FOMC are expected to come in at 5.0 to 5.2 percent range.
Chairwoman Yellen also appeared to confirm what most economist are predicting in terms of an interest rate hike coming in June if conditions at a minimum hold. For the full statement and the Q&A that follows click on the video below.
The FOMC (Federal Open Market Committee) held its last meeting of 2014 on December 17, 2014. As has become customary starting under the previous Federal Reserve Chairman Ben Bernanke, a press conference is held thereafter giving the public and media an opportunity to ask questions of the sitting chair about current and/or future strategy and policy.
A few key points that were touched on in the press conference were falling oil prices, three committee member dissent of current policy direction, Russia’s impact on the global economy, and an emphasis that every meeting is a “live” meeting where the committee could alter their strategic policy.
2014 Members of the Federal Open Market Committee
- Janet L. Yellen, Board of Governors, Chair
- William C. Dudley, New York, Vice Chairman
- Lael Brainard, Board of Governors
- Stanley Fischer, Board of Governors
- Richard W. Fisher, Dallas
- Narayana Kocherlakota, Minneapolis
- Loretta J. Mester, Cleveland
- Charles I. Plosser, Philadelphia
- Jerome H. Powell, Board of Governors
- Daniel K. Tarullo, Board of Governors