An interesting speech by Fed Chair Janet Yellen
Yellen notes –
“The proviso that
policy will evolve as needed is especially pertinent today in light of global
economic and financial developments since December, which at times have included
significant changes in oil prices, interest rates, and stock values. So far,
these developments have not materially altered the Committee’s baseline--or
most likely-- outlook for economic activity and inflation over the medium term.
Specifically, we continue to expect further labor market improvement and a
return of inflation to our 2 percent objective over the next two or three
years, consistent with data over recent months. But this is not to say that
global developments since the turn of the year have been inconsequential. In
part, the baseline outlook for real activity and inflation is little changed
because investors responded to those developments by marking down their
expectations for the future path of the federal funds rate, thereby putting
downward pressure on longer-term interest rates and cushioning the adverse
effects on economic activity. In addition, global developments have increased
the risks associated with that outlook. In light of these considerations, the
Committee decided to leave the stance of policy unchanged in both January and
March.”