>> welcome to "lunch money," where we tied together the best stories and businesses. we are doing an express version because janet yellen is set to speak at about 15 minutes at the economic club of new york. we'll have live coverage right here on bloomberg television. also on our live event channel /tv.loomberg.com that happens in about 15 minutes. in the interim, we talk about what everyone is talking about today -- the new york auto show. the biggest attraction was not for wheels on the showroom floor

. it was about a mile and a half away. g.m.'s ceo getting mobbed -- and i mean literally mobbed -- by reporters last night. ,he had just finished speaking and whenever she stepped in front of a microphone these days, questions fly regarding g.m.'s recent recall of those that ignition switches linked to 13 debts. >> in the last five years, we've made many important and meaningful steps at gm to change the company's culture. our focus is no longer on survival. we are even more focused on quality, safety, and doing what is right for the customer then i can say at any time during my 33 years with general motors. i hope you can say that my recent actions show that general committed to upholding our values not only in the good times but the times when the world is watching.

everybody is working 20 47 to make sure we are doing the right thing. >> in fairness, it was not all about inflection flexion and spend. mary barra did have some positive news to report. >> i would like to announce the creation of a new global product integrity organization that will be part of the global product development function. this new organization will be built on the formula and the very specific actions we have taken in recent years to lead the industry when it comes to vehicle dynamics. we will mirror this approach to focus on safety performance across all our vehicles. our goal is to ensure the highest safety execution across every single vehicle that we put into the marketplace around the globe. other top shaken up managers as well. the heads of communication and resources are leaving the company. every bar pledged to employees on the company website that senior leadership would be held

accountable for dealing with any and all safety concerns -- mary barra pledged to employees. she wants them to know they can voice their concerns whether openly or anonymously. she even talked about her place in the car business. >> i believe it took too long. that is one of the reasons we're doing the investigation, so we get every single ounce of learning out of this. so we will get parts in dealer'' hands to put on vehicles as quickly as we can. i will tell you they will be perfect parts from a specifications perspective, and they will be 100% tested to make sure of that. i have had a lot of challenging jobs through my career as most of the men in women as general motors who come to work everyday and give it their all. i am working on a little different things right now, but again, it's the challenge, and i love this business. >> another ceo in the hot seat, talking about brady dougan of credit suisse. he's been trying to navigate his

swiss bank through investigations of tax evasion, and we learn that new york's top regulators sent a subpoena to credit suisse. is according to a person with knowledge of the matter. dougan responded early this morning. >> clearly, we're working with them, providing investigation on the business. this is obviously around the cross-border issue, which is something we have been working on with the department of justice for over three years, so clearly, we are going to cooperate with them and work through the issues. overall, we actually feel like we have made good progress on getting a lot of these legacy issues behind us, so we settled the issue on cross-border. fhfa director settled as well, so we think we are making good progress, but clearly, we are going to try to work to get these issues resolved. >> news of the new york subpoena came as switzerland's second-largest bank reported a 34% drop in quarterly profit.

blame a drop in bond trading at the investment banking unit, but mr. dugan tried to put a little bit of a positive spin on the whole thing -- mr. dougan. billion in$1.9 pretax, one of the best returns on equity in the industry i think. you saw and our investment bank as well we actually had a very strong performance in our strategic businesses there. return on capital, 21%, so a lot of the businesses performed extremely well. >> another ceo in the headlines this morning -- ken mullis, whose investment bank went up elis,this morning -- ken mo whose investment bank went public this morning. my last question -- my first question in my last question was -- tell me a deal size and a prize that our investors will

make me some money." this is the first investment to go public -- tell me a deal size and price that our investors will make money. >> "make me some money." >> we have to perform, and we intend to. >> are you worried at all that it could be the top of the market here? >> i worry every single day about the execution and our clients and whether our culture is good. i worry about the things i can thel -- i can control, and market will do what it does. >> wouldn't it have been a competitive advantage to remain the only competitive bank that is not public? >> in some ways, it has been. that is what has enabled us to grow so fast, but the growth we have left -- i think there is more growth in the future than in the past.

the regulatory pressure of the big financial conglomerate competitors is unbelievable. i have been in the business 33 years, and i have never seen the pressure on the large competition that i have seen today, so i think talent will come out, and having a liquid tradable currency is going to be positive. we want our employees to be owners. 67% of the stock is owned by managing directors, and that is key to the culture. >> it provides liquidity for you and your partners? partners have been getting stock in the firm for seven years now, so yes, this will distribute some liquidity to them, so it's great for them, and now we can all move forward and focus on clients. >> how did you get investors to basically buy into this offering with the use of proceeds being a one-time payment to you and your partners? not investing in the business,

but directly into your pocket? >> i think they want to be part of this business. i think the cycle is good for m&a. i think our intimate -- our competitors are going to have trouble. most people who buy stock are under investing in the future. >> in terms of the fact that people are looking at this and saying he is taking money off , so why should they be buying? >> i visited 50 institutions, and not one asked me that question. it's a first. i don't know why they would be interested because nobody asked. they want to be part of our future. i think they want to invest with us, and i really did not ask -- get asked that question. >> you can watch the full interviews with ken moelis and /tvdy dougan on bloomberg.com

or any of our mobile apps. we will bring you full coverage of janet yellen speaking coming up in just a few minutes right here on bloomberg television.

" onhis is "lunch money bloomberg television and also streaming live everywhere. we are online, on your phone, on your tablet, apple tv, amazon fire tv -- you name it, we are there, so are you. fed chair janet yellen is getting ready to speak at the economic club of new york. we'll have live coverage with her remarks. in the interim, we want to take you back to the new york auto .how here is the vice president of u.s. operations with our very own car guy, matt miller.

>> it's a global team set up in hong kong, and we are moving this way, chasing bmw, chasing mercedes, chasing audi. by 2020, we will be sitting at the table with these guys. >> full disclosure, i went to the grand prix with you in .ustin carstian helped develop the i drove there. had a lot of fun, and it's a great seller for you. is this the way forward to have these incredible technological advances? >> there are two things. first of all, you have to have the technology right. a luxury brand today as defined by technology, but advocacy, so you have to have all that right, but also really good brands have really great emotion. part of the automotive business is that on track performance. we are certainly targeting the

young mindset, and that is very racing,racted to f1 anything where there is competitive motorsports. that's where those great automotive bands are developed and get their credibility. it's a global sport. not so big in the united states, very big advocacy group here. my bet is in for a five years years' in four or five time, it will grow as a spectator sport. >> dealers do not earn enough money, so we have been working toy hard with the dealers

get this reconnection on lots of .ifferent things so it is very important to get the dealers engaged. the second big thing is products. we will have to see whether it is possible for the all new press sought -- the all-new passat and we will have to see when the suv's are coming. we're working very hard not only on bringing cost to the market, but with all the accessible futures, all the exterior designs and from there. >> as volkswagen. meanwhile, ford is celebrating the 50th anniversary of the mustang. to mark the occasion, the automaker is releasing a special edition 20th anniversary mustang. matt got all the details from the ford chairman himself.

ofa little bit differentiation on the exteriors. little chrome treatment in certain places. pony and corral badge, which harkens back to the original mustang. unique interior finishes. really, there are only two things you have to decide -- do you want white or blue? and do you want manual or automatic? for me, it's always manual. >> you want manual, of course. what you think about the fact that more and more carmakers are automatic? >> i understand it, but i don't like it, and i love cars, particularly sports cars. but not everybody feels that way, so we do offer both. i will always get the manual. >> you love driving, and you want the manual transmission. on the other hand, you are kind

of the face of this push for connected cars, and we will see more automated driving in the future. obviously, that's better for traffic, better for gas mileage, but it takes away from your driving pleasure, no? >> you are right. you raise a fundamental dilemma because automated driving does allow denser patterns that allows better safety. there are a lot of great advantages to it, but i love to have ands and always always will. for me, it's a way to have great fun. i'm very excited about all the autonomous features coming into vehicles. people really do want them. everybody feels the way i do about driving a vehicle. a lot of people want to get from point a to point b and do it quickly and safely, so a lot of the automated features were put into allow them to do that, but i will always want to be behind the wheel. >> a lot of people are going to get a chance to be behind the wheel of this mustang because

you will be selling at all over the world in places that they previously could not get one. when i lived in europe, i was always looking for muscle cars, and they were not there. >> with very cool is i barcelona,this in and they went wild over it. even though they never had the mustang in europe, it needed no introduction at all. everybody knew mustang and what it stood for. it really is a brand unto itself. you don't have to say ford mustang. you just say mustang. it's like the f1 50. finally, people around the world are getting to have an mustang. >> you can watch our full coverage of the new york auto show at bloomberg.com/tv. coming up, fed chair janet yellen is set to speak at the economic club in new york. we will be bringing you full coverage and analysis coming up in just a few minutes right here on bloomberg television.

>> welcome back to bloomberg television. i'm adam johnson. we are breaking away from the usual "lunch money" to focus on the fed chair who is getting ready to speak at the new york economic club. we'll have live coverage here on bloomberg television and on our live event channel at bloomberg.com/tv. i want to bring in a bloomberg

editor michael mckee. >> we have to figure out what she wants to communicate. the text comes out in a few moments, but she disappointed a lot of people at her may press conference because she suggested they should not pay attention to the forecast the fed was putting out at that time it seemed to indicate the fed would raise rates sooner and faster than before. >> in other words, that's six-month time frame -- >> and the charts. is she going to defend that? that's what a lot of people on wall street want to know. they do not have the employment threshold anymore to judge when the fed might do something, so they want a bit more clarity, and that is what they are waiting to hear from her. >> what do you think she will say about inflation? >> that's an interesting question. do they think it is temporary or a more widespread problem?

that's what seems to be happening in europe, and the oecd reports inflation around the world is running at a 1.4% annual rate, so is this something they have control over or not? that's the real question. >> peter cook joining us from no, you would-- be an washington, d.c. your wheelhouse. her approval hearings were very political. now she has got the job. has her position depoliticized somewhat in washington? i think her position is somewhat comfortable. as mike pointed out, she still might have some questions on wall street and in the investment community, the economic community. the degree to which she classifies even further what she said after the last meeting in terms of the forward guidance,

if she is satisfied that she sent the right message to wall street back after that meeting at that press conference, she will not say much different. if she goes into a lot more detail, offers more clarity, that will tell you that she and the rest of the fed were not satisfied but the message was totally received on wall street, and she feels she needs to refine it. that will give you a sense as to whether or not this is a big moment for her and she feels a certain amount of pressure. saying more oris less in her best interest today? >> saying moore is always in her best interests if she can say it in a way people understand it. the headlines are out now. we will let jenna deliver her own remarks, but we can tell you she is staying committed to the fed being lower or longer -- we will let janet deliver her owner marks. -- deliver her own remarks. what could go wrong? >> the recovery has come a long way. more than 8 million jobs have

been added to nonfarm payrolls since 2009. almost the same number lost as a .esult of the recession led by a resurgent auto industry, manufacturing output has also nearly returned to its .re-recession peak while the housing market still has far to go, it seems to have turned a corner. it's a sign of how far the economy has come that a return to full employment is, for the first time since the crisis, in the medium-term outlook of many forecasters. it is a reminder of how far we that thiso long-awaited outcome is projected to be more than two years away. today, i will discuss how my colleagues on the federal open market committee and i view the

and how the economy this view is likely to shape our efforts to promote a return to maximum employment in the context of price stability. i will start with the fomc's outlook, which foresees a gradual return over the next two of economicrs conditions consistent with its mandate. while monetary policy discussions naturally begin with ofaseline outlook, the path the economy is uncertain. an ineffective holocene must respond to significant, .nexpected twists and turns my primary focus today will be on how the fomc's monetary policy framework has evolved to best support the recovery through those twists and turns

and what this framework is likely to imply as the recovery progresses. the fomc outlook for continued moderate growth is little changed from last fall. in recent months, some indicators have been notably weak, requiring us to judge whether it requires a change in the outlook. the unusually harsh winter weather in much of the nation has complicated this judgment, but my fomc colleagues and i genuinely believe that a significant part of the recent softness was weather-related. the continued improvement in labor market conditions has been part of this judgment. the unemployment rate at 6.7% fallen .3% .3% --

since late last year. labor force participation, which had been falling, has picked up .his year this rate is well below the committee's two percent longer .un objective many advanced economies are observing a similar softness in inflation. to some extent, the low rate of inflation seems due to influences that are likely to be temporary, including a

deceleration in consumer energy inces and outright declines core import prices in recent quarters. longer run inflation expectations have remained remarkably steady, however. that as the effect of transitory factors subside and labor market gains continue, inflation will gradually move .ack toward two percent in sum, the central tendency of fomc participant projections for the unemployment rate at the end to five point% six percent, and for inflation, .he central tendency is 1.7% 2% if this forecast were to become reality, the economy would

approach what my colleagues and i view as a maximum employment and price stability for the first time in nearly a decade. i find this baseline outlook quite possible -- quite plausible. of coarse, if the economy obediently followed our forecasts, the job of central bankers would be a lot easier, and their speeches would be a lot shorter. [laughter] alas, the economy is not often so compliant. so i will ask your indulgence for a few more minutes. the course of the economy is uncertain, monetary policy makers need to carefully watch for signs that it is diverging from the baseline outlook and then respond in a systematic way. let me turn first to monitoring and discuss three questions i

believe are likely to loom large in the fomc's ongoing assessment of where we are on the path back to maximum employment and price stability. the first question concerns the extensive slack in the labor market. is of the fomc's objectives to promote a return to maximum employment, but exactly what conditions are consistent with maximum employment can be difficult to assess. thus far in the recovery and to this day, there is little question that the economy has far from maximum employment, so measurement difficulties were not our focus, attainment for our maximum goal draws nearer, it would be easier for the fomc to form a more nuanced judgment about when the recovery of the labor market will be materially

complete. fomc's statement on longer-term goals and policy strategy emphasizes, these judgments are inherently uncertain and must be based on a factors.e of actors -- i will refer to the shortfall in employment relative to its mandate consistent level as labor market slack, and there are a number of different indicators of this slack. probably the best single indicator is the unemployment rate. at 6.7%, it is now slightly more than one percentage point above to 5.6% central tendency of the committee's projections for the longer run .ormal unemployment rate this shortfall remains significant, and in our baseline outlook, it will take more than two years to close.

that theresuggest may be more slack in labor markets than indicated by the unemployment rate. the workforce that is working part time but would prefer to work full-time remains quite high by historical standards. similarly, while the share of workers in the labor force who are unemployed and have been looking for work for more than six months has all and from its it remains as high as any time prior to the great recession. there is ongoing debate about why long-term unemployment remains so high and the degree to which it might decline in a more robust economy. as i argued more fully in a recent speech, i believe that long-term unemployment might all appreciably if economic conditions were stronger.

level of labor force participation may also signal additional slack that is not reflected in the headline unemployment rate. participation would be expected to fall because of the aging of , but the declines steepest in the recovery -- the decline stevens -- the decline .teepens in the recovery my own view is that some portion of the decline and participation likely reflects labor market slack. lastly, economists also look to wage pressures to signal a tightening labor market. at present, wage gains continue and historically slow pace in this recovery with few

signs of a broad-based acceleration. slack we seeive today diminishes, however, the fomc will need to monitor these and other labor market indicators closely to judge how and,slack remains therefore, how accommodative monetary policy should be. question that is likely to figure heavily in our assessment of the recovery is whether inflation is moving back toward the fomc's 2% longer run objective as envisioned in our baseline outlook. as the most recent fomc statement emphasizes, inflation consistently below 2% could pose risks to economic performance. the fomc strives to avoid inflation slipping too far below very% objective because

low inflation rates, adverse economic developments could more easily push the economy into .eflation the limited historical evidence with deflation shows that once it starts, deflation can become entrenched and associated with prolonged periods of very weak economic performance. a persistent bout of very low inflation carries other risks as .ell with the federal funds rate currently near the lower limit, lower inflation translates into a higher real value for the federal funds rate, limiting the capacity of monetary policy to support the economy. further, with long-term inflation expectations anchored near 2% in recent years, persistent inflation will -- well below this expected value increases the real burden of

debt for households and firms, which may put a drag on economic activity. i will mention two considerations that will be important in assessing whether inflation is likely to move back to 2% as the economy recovers. make -- wead to anticipate that is labor market will reduceses, it the drag on inflation. however, during the cup -- during the recovery, very high levels of slack have seemingly not generated strong downward inflation. we must therefore watch carefully to see whether diminishing slack is helping return inflation to our objective. projection baseline rests on the view that inflation expectations will remain well anchored near two percent and

provide a natural pull back to that level. but the strength of that poll -- pull in the unprecedented conditions we have continued to face is something we must continue to assess. at present, i rate the chances of this happening as significantly below the chances of inflation persisting below 2%, but we must always be prepared to respond to such unexpected outcomes, which leads to my third question -- myriads factors continuously buffet the economy, so the committee must always be asking what factors may be pushing the recovery off track. for example, over the nearly five years since the recovery, by economy has been affected

greater fiscal drag in the united states and by spillovers from the sovereign debt and banking crises of some euro area .ountries further, our baseline outlook has changed as we have learned about the degree of structural damage to the economy wrought by the crisis and the subsequent case of healing. let me offer an example of how these shape policy. in april 2010, the outlook appeared fairly bright. programsency lending that the federal reserve implemented at the height of the crisis have been largely wound down. soon to complete its first large-scale asset purchase program. private sector forecasters polled in the 2010 blue chip survey were predicting the

unemployment rate would fall steadily to 8.6% in the final quarter of 2011. this forecast proved quite accurate. the unemployment rate averaged 8.6% in the fourth quarter of 2011, but this was not the whole story. in april 2010, blue chip forecasters not only expected falling unemployment, they also expected the fomc to soon begin raising the federal funds rate. indeed, they expected the federal funds rate to reach 1.3% by the second quarter of 2011. by july 2010, however, with growth disappointing and the fomc expressing concerns about softening in both growth and inflation, the blue-chip forecast of the federal funds rate in mid-2011 had fallen to 0.8%.

by october, the forecasters expected that the rate would remain in the range of zero to 25 basis points throughout 2011, as turned out to be the case. expectations of policy tightening receipt, the new 600o initiated a billion dollar asset purchase program in november 20 10 -- not only did expectations of policy recede.ng receipt -- this improvement only came about with the fomc providing a considerably higher level of accommodation than originally anticipated. this experience was essentially repeated the following year. in april 20 11, blue chip expected the unemployment rate to fall to 7.9% by the fourth the fomcf 2012 with

expected to have already raised the federal funds rate to near 1% by mid-2012. as it turned out, the unemployment rate forecast was once more remarkably accurate. but again, this was associated with considerably more accommodation than anticipated. in response to signs of slowing economic activity, in august 20 11, the fomc for the first time expressed its forward guidance in terms of the calendar, stating the conditions would likely warrant exceptionally low levels for the federal funds rate at least through mid-2013. the following month, the committee added to accommodation by adopting a new balance sheet policy known as the maturity extension program. 2012, theoth 2011 and

unemployment rate actually declined by about as much as had year,orecast the previous but only after unexpected weakness prompted additional accommodative steps by the federal reserve. in both cases, i believe that the fomc's decision to respond to signs of weakness with significant additional accommodation claim an important role in helping to keep the project is labor market recovery .n track these episodes illustrate what i described earlier as a vital aspect of effective monetary policymaking. monitor the economy for signs that infants are unfolding in a materially different manner than just policyd response in a systematic manner. now we will turn from the task policy response.

fundamental to modern banking is the idea that monetary policy is more effective when the public better understand and anticipate how the central bank will respond to evolving economic .onditions specifically, it's important for the central bank to make clear how it will adjust its policy in response to unforeseen economic developments in the manner that reduces or blunts potentially harmful consequences. if the public understands and expects policymakers to behave in this systematically stabilizing manner, it will tend to respond less to such developments. monetary policy will thus have an automatic stabilizer effect operates to policy expectations.

it is important to note that tying the response of policy to economy makes the future course of the funds rate uncertain. but i responding to changing , policy reducing uncertainty about the course of inflation and employment. recall how this works airing the couple decades before the crisis sometimes known as the great moderation. the fomc's main policy tool, the federal funds rate, was well above zero, leaving ample scope to respond to the modest shocks that buffeted the economy during .hat time many studies confirm that the policyiate response of to those shocks could be described with a fair degree of

accuracy by a simple rule linking the federal funds rate to the shortfall or excess of employment or inflation relative to their desired values. rule provideslor one such formula. the idea that monetary policy should react in a systematic manner in order to blunt the effects of shocks has to remain central in the fomc's policymaking during this recovery. however, the application of this idea has been more challenging. with the federal funds rate and to near zero, the fomc has been to familiarly on policy tools, the first being forward guidance regarding the future setting of the federal funds rate, and the second being .arge-scale asset purchases there are no time-tested

guidelines for how these tools should be adjusted in response to changes in the outlook. as the episodes recounted hasier illustrate, the fomc continued to try to adjust its policy tools in a systematic manner in response to new ,nformation about the economy but because both the tools and the economic conditions have been unfamiliar, it has also been critical that the fomc communiqué how it expects to deploy its tools in response to material changes in the outlook. me review some important elements in the evolution of the framework.unication when the fomc initially began ,sing its unconventional tools policy communication was relatively simple. in december 2 thousand eight,

for example, the fomc said it expected the conditions would warrant keeping the federal funds rate near zero for some time. this period before the liftoff in the edible funds rate was described in increasingly specific and, as it turned out, time. periods over sometime became an extended changedwhich was later to mid-2013, then late 2014, mid-2015. this fixed calendar-based guidance had the virtue of simplicity, but it lacked the automatic stabilizer property of communication that would signal stance of policy and forward guidance might change as developments unfolded,

and as we learned about the extent of the need for .ccommodation more recently, the federal reserve -- and i might add other central banks around the world -- have sought to incorporate this automatic stabilizer feature in their communications. in december 20 12, the committee reformulated its forward guidance, stating it anticipated that the federal funds rate at leastain near zero as long as the unemployment rate remained above 6.5%. inflation over the period between one and two years ahead was projected to be no more than .5% above the committee's and longer-term inflation expectations continue .o be well anchored this guidance emphasized to the public that it could count on a near zero federal funds rate at

least until substantial progress in the recovery had been however long that might take. when these thresholds were announced, the unemployment rate 7.7%, and theo be committee projected that the 6.5% threshold would not be reached for another 2.5 years, in mid-2015. thatommittee emphasized these numerical criteria were not triggers for raising the federal funds rate, and chairman bernanke stated that ultimately any decision to begin removing accommodation would be based on a wide range of indicators. our communications about asset purchases have undergone a similar transformation. the initial asset purchase andrams had fixed time quantity limits, although those limits came with the proviso

that they might be adjusted. in the fall of 2012, the fomc launched its current purchase program. this time explicitly tying the course of the program to evolving economic conditions. when the program began, the rate of purchases was 85 billion dollars per month, and the committee indicated that purchases would continue providing that inflation remained well behaved until there was a substantial improvement in the outlook for the labor market. cumulative rye grass toward maximum unemployment since the initiation of the program and the improvement of the outlook for the labor market, the fomc began reducing the pace of asset , stating last december that if incoming information committee'sorts the

expectation of ongoing improvement in labor market conditions and inflation moving back towards longer-term objective, the committee will likely reduce the pace of asset purchases in further measured .teps purchases are currently proceeding at a pace of $55 million per month. consistent with my theme today, however, the fomc statement underscores that purchases are not on a preset course. the fomc stands ready to adjust the pace of purchases as warranted, should the outlook change materially. recent meeting in march, the fomc reformulated its forward guidance for the federal funds rate where one of the main motivations for this change was that the unemployment rate might threshold.the 6.5%

the new formulation is also well-suited to help the fomc explain policy adjustments that may arise in response to changes in the outlook. i should note that the change and forward guidance did not indicate a change in the 's policy and tensions, but instead was made to clarify the committee's thinking about economy continues to recover. the new guidance provides a general description of the framework that the fomc will apply in making decisions about .he timing of liftoff specifically in determining how long to maintain the current to 25 basis of zero points for the federal funds rate. the committee will assess progress, both realized that expected, toward its objectives

and 2%mum employment inflation. in other words, the larger the shortfall of employment or inflation from their respective the slower the projected progress toward those objectives, the longer the current target range for the federal ones rate is likely to be maintained. this approach underscores the continuing commitment of the fomc to maintain the appropriate degree of accommodation to support the recovery. the new guidance also reaffirms the fomc's view that decisions about liftoff should not be indicator, bute that it will take into account a wide range of information on the , inflation, and financial developments. along with this general framework, the fomc provided an assessment of what that

for thek likely implies path of policy under our baseline outlook. at present, the committee andcipates that economic financial conditions will likely warrant maintaining the current for the federal funds rate for a considerable time after the asset purchase program ends, especially of rejected inflation -- if projected inflation continues to run below the committee's longer-term goal and provided that longer-term inflation expectations remain well anchored. finally, the committee began explaining more fully how policy aftererate in the period liftoff, indicating its expectation that economic conditions may for some time warrant keeping short-term therest rates below levels

committee views as likely to .rove normal in the longer run fomc participants have cited different reasons for this of you, but many of the reasons involve persistent if x of the financial crisis and the that the productive capacity of the economy will grow more slowly, at least for a time, than it did on average before the crisis. of theectation achievement of our economic objectives will likely require a real interest rates for some time is again not confined to the united states but is shared broadly across many advanced economies. of course, this guidance is a forecast and will evolve as we gain further evidence about how the economy is operating in the wake of the crisis and ensuing recession.

in summary, the policy framework i have described reflects the fomc's commitment to systematically respond to unforeseen economic developments in order to promote a return to themum employment in context of price stability. it is very welcome news that a return to these conditions has finally appeared in the medium-term outlook of many forecasters. but it will be much better news when this objective is reached. my colleagues on the fomc and i will stay focused on doing the federal reserve tossed part to promote this goal. thank you -- the federal reserve's part to promote this goal. thank you. >> janet yellen speaking at the economic club of new york making it clear that we've come a long way and we have a long way to go. my take away -- she said the baseline outlook of getting to full employment by 2016, which

also was accompanied by inflation of around two percent -- "quite plausible." what is your take away? >> she wanted to make the case .hat the fed does have a plan and whether or not she communicated that to the bond markets remains to be seen. she's going to take questions now. there may be some pointed questions in that area. >> let's go back to the q&a. >> this important presentation , clearly very clear and cogent remarks and yet another example of straightforward communication from the federal reserve. thank you for that. >> thank you. >> for my first question, i would like to go back to the problem that you discussed earlier, and that is the vexing and long-lasting nature of unemployment in the united states following the financial crisis. we see that beneath a national data, which are improving, there's a very wide aspersion and labor market performance.

big dipper and his, for example, by geography in which some cities and some states are doing far better than others and also a very dramatic difference by education. much depends upon how much education and vocational training a worker may have. what is the role of the federal reserve in addressing these unemployment? what other government policies might be helpful? what other private actions might be helpful in finally getting unemployment back down to more comfortable levels? >> i think you are absolutely in thehat the recovery labor market has been exceptionally slow. the financial crisis, i think, left us with a lot of headwinds