Janet Yellen, chair of the Board of Governors of the Federal Reserve, speaking at the Stanford Institute for Economic Policy Research, notes that it is 'prudent' to adjust the stance of monetary policy gradually
Key Quotes
Inflation increasing to 2% over the next 2 years
Unwise to allow US economy to run persistently 'hot'
Determining how best to adjust rates to foster strong job growth, low inflation won't be easy
Labor utilization close to estimated long-run level
Inflation likely to reach fed's 2-pct goal over next couple of years
Expects further strengthening of labor market in coming months
Fed policy is not behind the curve
Simple monetary policy rules, like the Taylor rule, provide useful guidance, but can be problematic
Surge in inflation from suddenly overheating job market unlikely
Stance of monetary policy remains modestly accommodative
Downward pressure of fed's balance sheet on rates is expected to decline
Fiscal policy may affect outlook, rate path, but uncertainties remain
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