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HIGHLIGHTS-Fed chief Yellen's news conference after FOMC meeting

Wed, 21st Sep 2016 20:15

WASHINGTON, Sept 21 (Reuters) - The following are highlights of Federal Reserve Chair Janet Yellen's press conference on Wednesday following the end of a two-day meeting of the U.S. central bank's policy-setting committee.

Yellen on the Fed not being politically motivated:

"I have no concern that the Fed is politically motivated and I will assure you that you will not find any signs of political motivation when the transcripts are released in five years. It is important that we maintain the confidence of the public and I do believe that we deserve it. I know that these are difficult decisions and everybody may not agree with them but I hope the public will understand that we are striving to do our best to pursue these goals that matter to all of us."

Yellen on decline in business spending:

"Investment spending really has been quite weak for some time and we are really not certain exactly what is causing that. Part of it of course has been the huge contraction in drilling activity associated with falling oil prices, but the weakness in investment spending extends beyond that sector and I'm not certain of exactly what explains that ... I'm not aware of evidence that suggests that it's political uncertainty."

Yellen on commercial real estate:

"I would say in the area of commercial real estate, while valuations are high, we are seeing some tightening of lending standards and less debt growth associated with that rise in commercial real estate prices. But more generally we are not seeing signs of leverage building up or maturity transformation in the way that we saw in the run-up to the crisis and we are keeping a close eye on it."

Yellen on moderate threats to financial stability:

"The threats to financial stability I would characterize at this point as moderate. In general I would not say that asset valuations are out of line with historical norms."

Yellen on politics plays no role in Fed decisions:

"I can say emphatically that partisan politics plays no role in our decisions about the appropriate stance of monetary policy. We are trying to decide what the best policy is to foster price stability and maximum employment and to manage the variety of risks that we see as affecting the outlook. We do not discuss politics at our meetings and we do not take politics into account in our decisions."

Yellen on credibility and revisions of forecasts:

"We all agree we are undershooting our inflation goal and that we want to make sure we stay on a course that raises that to 2 percent, and we're struggling with a difficult set of issues about what is the new normal in this economy and in the global economy more generally, which explains why we keep revising down the rate path."

Yellen on economy has more room to run:

"The economy has a little more room to run than might have been previously thought. That's good news....We don't see the economy is overheating now."Yellen on little risk of falling behind curve:

"Since monetary policy is only modestly accommodative, there appears little risk of falling behind the curve in the near future, and gradual increases in the federal funds rate will likely be sufficient to get to a neutral policy stance over the next few years.

Yellen on cautious approach:

"This cautious approach to paring back monetary policy support is all the more appropriate given that short-term interest rates are still near zero, which means that we can more effectively respond to surprisingly strong inflation pressures in the future by raising rates than to a weakening labor market and falling inflation by cutting rates."

Yellen on rate outlook:

"We judged that the case for an increase has strengthened but decided for the time being to wait for further evidence of continued progress toward our objectives."

Yellen on why rates kept on hold:

"Our decision does not reflect a lack of confidence in the economy. Conditions in the labor market are strengthening and we expect that to continue. While inflation remains low we expect it to rise toward the 2 percent objective over time. But with labor market slack being taken up at a somewhat slower pace than in previous years, scope for some further improvement in the labor market remaining and inflation continuing to run below our 2 percent target, we chose to wait for further evidence of continued progress toward our objectives."

(Reporting by Washington economics team)

(c) Copyright Thomson Reuters 2016. Click For Restrictions -

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