Yellen: Fed Doesn’t Want to Get Behind the Curve

The transcript discusses the economic growth forecast for the year, highlighting expectations of growth exceeding potential, leading to a tightening labor market and a decrease in unemployment rates. Inflation is projected to gradually return to 2%, despite current influences from past energy price declines and dollar appreciation. The committee anticipates these influences will fade, allowing for upward inflation pressure. Consequently, further increases in the federal funds rate are deemed appropriate, while maintaining an accommodative stance. The committee aims to avoid significant inflation overshoot to prevent rapid tightening that could jeopardize employment gains.

What is the expected impact of economic growth on the labor market by the end of the year?

• Stagnation in employment levels

• Decrease in job opportunities

• Tightening of the labor market

• Increase in unemployment rates

Which factors are currently weighing on inflation, according to the transcript?

• Decrease in labor market participation

• Appreciation of the dollar

• Increase in energy prices

• Rise in global demand

What is the expected trend for inflation as the labor market continues to improve?

• Inflation will decrease

• Inflation will remain stable

• Inflation will face upward pressure

• Inflation will become unpredictable

Why does the committee see it appropriate to increase the federal funds rate?

• To prevent significant inflation overshoot

• To rapidly tighten monetary policy

• To maintain a stable unemployment rate

• To decrease inflation below 1%

What is the potential risk of not carefully managing the federal funds rate?

• Significant inflation overshoot

• Rapid economic growth

• Sustainable employment gains

• Decreased labor market participation