- The three big questions for the FOMC, says Janet Yellen are 1) Is there still significant slack in the labor market 2) Is inflation moving back toward 2% 3) What factors may push the recovery off track?
- Full speech
- As for labor, the Fed's baseline projection is more than another two years until full employment (defined as headline UE of 5.2-5.6%) is reached. She notes wage pressures are a good signal of a tightening labor market and signs of acceleration are difficult to find.
- Addressing the FOMC's dropping of guidance being steered by the headline UE rate, Yellen says it may have changed, but the goal of guidance - that the FOMC will maintain ZIRP for some time - hasn't. "Decisions about liftoff (in the Fed Funds rate) should not be based on any one indicator, but that it will take into account a wide range of information on the labor market, inflation, and financial developments."