Janet Yellen says it "makes sense" to gradually withdraw monetary support at the pace of "a few times a year". The funds rate is currently at a median 0.625 percent which she sees rising by the end of 2019 to about 3 percent, the rate she describes as the longer-run neutral rate. She said the economy is near full employment, though she noted there may be room for further progress, and that inflation, though still "fairly low", is moving toward the Fed's 2 percent goal. She repeated that the December hike, when the Fed raised the funds target range by 0.25 percent, reflects the Fed's confidence that the economy will continue to improve. Yellen did not address likely changes ahead for fiscal policy nor did she address balance-sheet reduction.
In questions and answers Yellen stressed that the Fed does pay attention to the dollar, gains for which she attributes to market expectations for increasing fiscal stimulus and to interest rate differentials between lower global rates and higher U.S. rates. In two downbeat notes, she said GDP is expected to continue to slow and fall under 2 percent while labor participation is expected to continue to decline.